5 Things To Know About Divorce & Bankruptcy in California

5 Things To Know About Divorce & Bankruptcy in California

The decision to file bankruptcy at the same time as divorce is common. But there are some things you should know before filing either, especially if you live in California. 

What Happens When You File for Bankruptcy During A Divorce?

The right timing is essential when you’re filing for divorce and bankruptcy. You or your spouse may file for bankruptcy before, during, or after filing for a divorce in California. You should consult a bankruptcy attorney familiar with divorce law to determine when it is best to file if at all.

Filing for bankruptcy while your divorce is still ongoing can impact the time it takes for both processes to be completed. It’s not recommended to file for bankruptcy during your divorce case. Filing for bankruptcy will cause your assets to become part of your bankruptcy case, which means the judge presiding over your divorce may not be able to  divide assets until your bankruptcy case has been resolved. Be sure to be properly advised. 

How Does Chapter 13 Bankruptcy Affect Divorce?

A Chapter 13 bankruptcy is a class of bankruptcy that allows working individuals to create a repayment plan for all or part of their debts. It mainly helps people who have fallen behind on paying debt on things like a mortgage or a car loan. Filing for divorce while in Chapter 13 bankruptcy or vice versa can cause significant complications.  Be properly advised. 

Is It Better To File For Bankruptcy Before Or After Divorce? 

There are many benefits to filing for bankruptcy before you get a divorce:

  • Filing with your spouse means you only need to pay one filing fee and can share legal fees.
  • It makes property division easier once you do decide to divorce.
  • You can discharge your unsecured debts and not worry about splitting them during a divorce. This is very helpful to couples with shared debt, such as credit card debt or a mortgage. 
  • Take advantage of bankruptcy exemptions available to married couples (an example would be higher  exemptions on jointly owned properties, like a home).

It should be noted that some debts are nondischargeable as per California law. This includes spousal support child support and debts awarded in the divorce. 

Why Do People File For Bankruptcy After Divorce? 

There are pros and cons to filing for divorce, both before and after divorce. Some people choose to file for bankruptcy after divorce for these reasons: 

  • Only one spouse plans on filing for bankruptcy.
  • You can maintain more property.
  • The relationship between the two partners is not good. 
  • When you and your spouse’s combined income is too high to file for Chapter 7 bankruptcy.  

Can Divorced Couples File For Bankruptcy Together?

Filing for bankruptcy together is only allowed if you’re still legally married. A divorced couple cannot file for bankruptcy together. 

Call To Schedule A Divorce Bankruptcy Consultation

Southern California is an expensive place to live. If you’re looking to file for divorce and bankruptcy, timing is everything. The attorneys at Bloom & Rudibaugh have expertise in both divorce and bankruptcy cases. Call our Hemet Law Office today at 951-652-1400 or our Murrieta/Temecula Law Office at 951-296-5360 to schedule a consultation with our team.