Bankruptcy and Divorce: Navigating Financial Recovery During Life Transitions

Divorce and bankruptcy are two of life’s most stressful events. Going through both at the same time can feel overwhelming. But with the correct information and support, it is possible to get through it and come out stronger on the other side.

When financial struggles and relationship breakdowns happen at the same time, it’s essential to understand how bankruptcy and divorce affect each other. Your decisions during this period can shape your financial future for years to come.

Which Comes First—Bankruptcy or Divorce?

There’s no one-size-fits-all answer. It depends on your unique situation.

It sometimes makes sense to file for bankruptcy before the divorce. This allows both spouses to wipe out joint debts and reduce the issues that must be resolved during the divorce.

In other cases, it may be better to divorce first, especially if only one spouse plans to file for bankruptcy or if income levels change significantly after separation.

Filing jointly for bankruptcy before the divorce can save money on filing fees and attorney costs. It can also simplify the division of debts.

However, this approach only works if both parties can still work together and communicate during the bankruptcy process.

How Bankruptcy Affects Divorce

Bankruptcy puts an automatic stay on most debt collection. This means creditors must stop calling, sending bills, or taking legal action. Filing for bankruptcy during your divorce may delay the resolution of financial matters like property division or support payments.

That’s because the bankruptcy court may temporarily control certain assets while it sorts out what can be used to repay creditors.

Also, bankruptcy can discharge many unsecured debts, like credit cards or medical bills. However, it cannot eliminate certain divorce-related obligations, especially child support, spousal support, or debts assigned in the divorce judgment.

That’s why timing matters. If a debt is discharged in bankruptcy before the divorce is finalized, it may no longer be divided in family court. On the other hand, if the divorce assigns a debt to one spouse, bankruptcy usually won’t erase that obligation if it’s considered part of the divorce agreement.

How Divorce Affects Bankruptcy

Divorce often leads to decreased income, increased living expenses, and legal costs. These changes can make it harder to pay off debts, which is why many people consider bankruptcy around the same time.

Your household size and income after divorce may affect which chapter of bankruptcy you qualify for. For example, if you earn less after separating, you may now pass the means test and qualify for Chapter 7.

However, it’s important to note that bankruptcy courts don’t divide property or handle child custody. Those issues are decided in divorce court.

What About Joint Debts?

If you and your former spouse had joint credit cards, loans, or medical bills, you may still be legally responsible, even after divorce. If your ex agrees to pay but doesn’t follow through, creditors can come after you.

Filing for bankruptcy may protect you from those collections, but it won’t stop your ex from being liable. And if only one of your files is available, the other may still be pursued for the full amount.

It’s best to address joint debts carefully during both processes to avoid future conflicts or surprises.

You Don’t Have to Navigate This Alone

Going through a divorce is hard. So is filing for bankruptcy. Doing both at once can feel like too much to handle. But it’s possible to come out of this time with a fresh start and a clear plan forward.

A bankruptcy attorney can work alongside your divorce lawyer to protect your rights, help you understand your options, and build a strategy that supports your recovery.

If you’re facing divorce and financial strain, it helps to speak with someone who understands both. For more information or to schedule a consultation to discuss your situation, contact R. Flay Cabiness, II, P.C. at (912) 417-5041 (Brunswick, GA), (912) 809-2141 (Hazlehurst, GA), or (912) 324-3176 (Jesup, GA). Support is available, and you don’t have to go through it alone.