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Bankruptcy and Divorce: Which Should Come First?


The sad reality is that in many cases, divorce often leads to bankruptcy. It is also true that because financial problems tend to cause problems in personal lives, bankruptcy also tends to lead to divorce. Either way you look at it, the two can go hand in hand. But which should come first? Is there a reason for doing one before the other?

Pros/Benefits of Filing for Bankruptcy First


As a married couple, you may be able to protect property held by both of you under an exemption known as tenancy by the entireties. This is a legal protection that makes property held by both spouses exempt from being taken by creditors, to pay a debt that is owed by only one spouse.

The protection is lost, however, when there is a divorce. A bankruptcy attorney can analyze your property and tell you whether this exemption is helpful. If so, it may be smart to file the bankruptcy first.

Additional Exemptions

As a married couple, you will get double the amount of exemptions. Depending on how much property you have, and how much you need to protect, these additional exemptions can be very helpful, as they will allow you to keep twice as much property

Less Fighting

The less debt that you have as a married couple, the less there may be to argue over in your divorce. There is no need to divide debt in a divorce that has already been discharged. Additionally, discharging debt may leave both parties with more disposable income, and thus more freedom, which could lead to less fighting over the financial issues (such as support, alimony or division of property) that often occur in a divorce.

You Can Take Out Credit (If Available)

If you take out credit to start your life over again before your bankruptcy, you could get into trouble. You aren’t allowed to charge up cards, or take out credit, immediately before filing for bankruptcy. However, after bankruptcy you are free to do so. While you don’t want to get yourself in financial trouble again right after your discharge, you at least can charge what you need to, knowing you’ve already gotten your bankruptcy discharge.

Cons/Negatives of Filing for Bankruptcy First

Too Much Income

If you are filing for bankruptcy first, and want a Chapter 7 bankruptcy, your combined income as a couple may be too much to file for Chapter 7.

Time (In a Chapter 13)

A Chapter 13 bankruptcy can require a payment plan over 3-5 years. You may want to be divorced long before that time. That means that you would have to modify your Chapter 13 payment plan, if you had to file for Chapter 13 and get divorced in the middle of your plan. If your income as a divorced person isn’t enough for a Chapter 13, you may have to file Chapter 7.


Bankruptcy will damage your credit (although not forever, and not as much as you may think). Still, for a newly divorced person seeking to rent an apartment, get a car loan, or do the things that divorced people often do to start their lives over, it may be difficult to do so immediately after a bankruptcy.

We can answer any bankruptcy questions you may have. Contact the Boca Raton bankruptcy attorneys at the Law Offices of Stephen Orchard at 561-455-7961 for a consultation today.



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