When is it best to file bankruptcy, during or after the divorce?

Question

I am in the middle of a messy divorce. The house is in foreclosure and I have a lot of debt. The house does have an offer but I will owe on closing and not sure how I can come up with the money for that. My divorce will not be final for a couple months, should I wait until the divorce is final or can I proceed with bankruptcy? The only debt that is in both our names are the three mortgages, what happens with them. How will it effect his credit?

Answer 1

During the divorce. Ask you divorce attorney for a referral to a bankruptcy attorney. Your soon to be ex is responsible for half the house if it was purchased while you were married and you used community assets.

Why do you give a hoot about his credit....worry about yours. Ten years is the time the BK is on your credit report and can effect your ability to enter into a rental or lease contract.

If this is the only late payment outstanding debt you have selling it and working with the lender to repay the deficit 50/50 with your spouse will prevent the negative credit score. Your BK lawyer can help you with that or Google... consumer credit ...you will find lots of FREE help with that search.

Answer 2

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RE When is it best to file bankruptcy, during or after the divorce?

I am in the middle of a messy divorce. The house is in foreclosure and I have a lot of debt. The house does have an offer but I will owe on closing and not sure how I can come up with the money for that. My divorce will not be final for a couple months, should I wait until the divorce is final or can I proceed with bankruptcy? The only debt that is in both our names are the three mortgages, what happens with them. How will it effect his credit?

Answer 3

You need to consult a local bankruptcy attorney and also discuss this with your divorce lawyer. There are so many variables that could impact the answer to this question, it's rather difficult to say and most of the people who have responded so far are not bankruptcy attorneys.

Entering an agreement for a short sale is not always a good idea. Under the Internal Revenue Code, debt forgiveness is income and therefore taxable under most circumstances. However, debt forgiveness achieved in bankruptcy is NOT taxable, so filing BK before the foreclosure sale might be better for you if you cannot get an offer that at least pays off what is owed.

Answer 4

Divorce first, THEN decide whether bankruptcy is necessary.

The name on the debt account means almost NOTHING in divorce proceedings. Marital debts, just like marital assets, are taken into account at dissolution. If "your" non-mortgage debt is classified as "marital debt" by the judge, you'll still be ultimately responsible to the lender, but the judge might order him to pay some of it.

Translation: some portion of the mortgage deficiencies (my LORD, how did you wind up with THREE mortgages?!?!?), and possibly some of "your" debt as well, could get taken care of in the divorce proceedings. When the dust settles, you'll be able to make the decision of whether to file for bankruptcy.

Before you consider filing, however, check into a credit counseling service, or a debt consolidation program. Make sure that whatever company you go to is NON-PROFIT, otherwise, you could get robbed blind.

Caution: child support obligations are NEVER dischargeable in bankruptcy, and in most cases, neither are alimony obligations.

Edit: assumes U.S. law.

Answer 5

If anything...you should file bankruptsy together. Both your credit will be a mess for 7 years, but you'll start out single with nothing owing on either part.

It's the 7 year thing that could bite you in the butt, because most financing places won't touch you, or getting a loan is very hard. Some people it helps, others it hurts.

You may reorganize your debts, enabling you to keep your houses or you may be told to sell them all, but that is a price to pay. And it all depends on the court.

Answer 6

Since youre in the middle of a divorce, a bankruptcy wont be honored in a court of law so it wont do you any good. Youre going to have to wait til your divorce is final, sorry. Biggest reason is taht without your hubbys full consent to this,the courts will look at you as a revengeful wife seeking to do irrepairable damage to your husband. Not good. Once the divorce is finalthen file on your name only debts if you still have anything left. Good luck

Answer 7

Are you a two income household? If so, you probably make too much money together for bankruptcy these days anyway. I'd wait til after the divorce is final and more than likely, your debt with far outstrip you income.

Answer 8

When I was going through my divorce, my ex informed me he was going to have to file for bankruptcy. I pushed fast and hard for a disolusion!! If he had done that while we were still married, I would have had to file, too. I did not want to do that because it stays with you for a few years. The only other option I had was to be responsible for any bills that were in both of our names. I got stuck with 3 credit cards but I would have rather done that than go bankrupt. Hope this info helps.

Answer 9

File after the divorce and make sure to file on everything you owe. What happens after that with the mortgages are not your problem. All that matters is that you will be cleared and freed of the debts.

Answer 10

I'd say during, so both of you won't have any outstanding bill collectors coming after you. You both can start with a clean slate.