Can I File for Bankruptcy With My Spouse If We Already Filed for Divorce?
Bankruptcy often goes hand in hand with divorce. Attorney fees, spousal and child support and the sudden appearance of a new set of living expenses can create a situation where even the most financially responsible couple is unable to pay all of their debts. If you and your spouse face a crippling debt load, it may be advisable to consider filing a joint bankruptcy.
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What Bankruptcy Doesn't Affect
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Your bankruptcy, whether Chapter 7 or 13, will have absolutely no effect on child custody, as bankruptcy is all about debt. Child support will also remain unaffected, as will past due child and spousal support arrears. Under current law, student loans and certain tax liabilities remain nondischargeable, which means they will still be there after the bankruptcy. But both of you can get rid of credit cards, mortgage and car loan deficiencies and medical bills through the bankruptcy court.
What Happens If You File Alone
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Creditors don't care about community property and equitable distribution; in general, they can only sue the party whose name appears on the debt. In some families, all of the credit rests in one party's name solely, which means the creditors follow him on his way out of the marriage. While a family court may divide the debt between the parties, the creditors will pursue collection from the liable party. This may lead him into bankruptcy but doesn't necessarily mean the other spouse has to file with him. A solo filing will generally stick the other side with responsibility for joint debts, since creditors will then look to the co-debtor for payment. If the bill is in the bankrupt party's name solely, though, the creditor generally will be unable to pursue a current or ex spouse.
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Effect of a Joint Filing on Property Division
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Courts divide marital debt, as well as marital property, under the laws of either community property or equitable distribution. In cases where couples face a staggering debt load, they can find themselves spending thousands of dollars in attorney fees essentially fighting over nothing. Parties can minimize this expense and futility by disposing of as much debt as possible in a joint bankruptcy. Thereafter, they can focus on distributing nondischargeable debts and exempt assets. In some cases, a joint bankruptcy may be necessary to protect the former marital residence from attachment by significant joint creditors such as hospitals.
Effect of a Joint Filing on Alimony
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Although alimony law varies widely from state to state, court decisions as to support entitlement and amount center largely on what is sometimes called the dependency analysis, which questions whether a party claiming alimony is a dependent spouse. A dependent spouse is one who cannot maintain her accustomed standard of living during the marriage without the assistance of the other party. A supporting spouse is one who provided that standard of living and who presently has the ability to contribute toward it. As debt load is one consideration in the dependency analysis, giving each party some breathing room in regard to finances reduces the dependent spouse's need for support and increases the supporting spouse's ability to pay it. Due to the dependency analysis, a joint bankruptcy can make alimony unnecessary in some cases.
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