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Divorce and bankruptcy

On Behalf of | Dec 15, 2015 | Property Division |

In some cases, Ohio residents who are wanting to divorce also need to file for bankruptcy. Each action can pose several different issues, and it is important that people who are considering both understand whether they should file jointly or separately, as well as if it is a better idea to file for bankruptcy before or after filing for divorce.

There are several important factors that can have an effect on both the filed bankruptcy as well as the divorce case. One of these is the incomes of both spouses. If one spouse has a substantial debt load while the other has a substantial amount of separate assets, the spouse with the large amount of debt may be unable to file for Chapter 7 bankruptcy protection. In that case, they may want to hold off on filing until after the divorce has been filed.

A married person also cannot choose to file for joint bankruptcy unless the other spouse agrees to do so as well. If the person then files separately, the other spouse will not have their responsibility for debts discharged. Joint bankruptcy petitions may thus be a good idea prior to the divorce filing. Once a bankruptcy petition is filed, the debtor’s property also becomes the assets of the bankruptcy estate. They will not be subject to a property division order in a divorce unless leave is given to do so by the bankruptcy court.

The division of marital property can be complicated when one spouse files for bankruptcy while a divorce is pending. People who are considering both divorce and bankruptcy may want to consult with a family law attorney. The attorney may be able to help them by consulting with a bankruptcy attorney regarding the best options for them. They may then help their clients figure out how their marital assets will ultimately be divided in their divorces.