Divorce and Bankruptcy

Facing a divorce as well as having overwhelming debt, can be a stressful matter. However, timing can be crucial. Discussing your options with a bankruptcy attorney can help you decide if it is better to file bankruptcy before or after your divorce.

Filing for divorce before bankruptcy

It may be a good idea to file for a divorce if your combined income is higher for Chapter 7 bankruptcy. An adequate plan in a divorce may also remove some assets from the influence of the trustee. For instance, an appropriate judgment can safeguard your spouse from your creditors after the divorce if she takes a house. However, a bankruptcy trustee has the authority to cancel some transfers by clawback procedures. During the process, you don’t want to be charged with committing bankruptcy fraud.

Bankruptcy and child custody or child support

In general, child custody conflict or determination of child support is not impacted by the bankruptcy filing. Nevertheless, the financial problems of bankruptcy may affect how the child custody or visitation judgment is made. The principal concern during a child custody decision is the best interest of the child. Certain financial elements could be taken into account as the parent’s capacity to look after the child adequately and provide a stable home environment. A bankruptcy cannot remove the debt you owe back for child support.

How bankruptcy and divorce can affect each other

During the process of filing for bankruptcy, the bankruptcy code enforces constituting an “automatic stay,” which is an order that stops any legal and collections actions against the bankruptcy petitioner. For instance, collections actions, wage garnishments, collection calls, and letters, and foreclosure actions.

Also, going through a divorce will stop the division of the marital assets of the person who has filed for bankruptcy. This decision will remain until all the process is over or the bankruptcy court gives the authorization to pursue the division of assets.

Consider consulting an experienced Houston bankruptcy attorney before making any decisions that may inadvertently disrupt both of you and children.