Many divorces are rooted in financial struggles, so it is not unusual that one or both spouses find themselves deep in debt and besieged by creditors. Filing for bankruptcy can either greatly complicate or greatly simplify divorce, depending on timing and other considerations. Before initiating a divorce or bankruptcy, you should consult an experienced family law attorney.
Schoenberg Family Law Group, P.C., helps clients address bankruptcy within the broader context of divorce, alimony, child support, and division of property and debts. We aim to deal proactively with debt, insulating clients as much as possible from an ex-spouse’s financial troubles.Our San Francisco lawyers represent divorcing parties throughout the Bay Area, including many high net worth clients who are trending toward bankruptcy because of substantial marital debts.
Should I File For Bankruptcy Before Or After?
This is the most common question relating to bankruptcy and divorce. As a general rule, there are more reasons to declare bankruptcy prior to divorce:
- Discharging unsecured debts (e.g., credit cards, medical bills) improves the standard of living for both parties after divorce.
- Eliminating or reorganizing debts streamlines the divorce process — leaving the parties with one less issue to negotiate or litigate.
- Discharging debts before divorce ensures that you will not be responsible for that debt if your partner later defaults or files for individual bankruptcy.
Spouses commonly feel a false sense of security after dividing their debts in a signed marital settlement agreement that contains a “hold harmless” provision. If your spouse seeks to discharge these debts after divorce, he or she is legally absolved, but those creditors can come after you as the co-obligor. Your marital settlement agreement will not protect you from this. It is unfair, but there is nothing a state court can do about it.
Frequently, after one party initiates divorce, the other party subsequently files for bankruptcy. That triggers an automatic stay, which requires going to bankruptcy court to obtain relief from stay so the divorce can proceed. All of this needlessly adds to the cost, length, and animosity of divorce proceedings.
“When my husband surprised me with divorce papers, I didn’t know where to turn. Thankfully, I found Debra Schoenberg — she was amazing. She gave me all of the care and attention I needed while aggressively representing me. I am very happy with the outcome of my case. I strongly recommend her to anyone who needs a really good family lawyer.”
— L.S. (See more testimonials from clients.)
Marital Debt
When the couple files for bankruptcy together before divorce, they avoid many of the above conflicts, and the divorce process may be more tolerable. However, there may be valid reasons to delay a bankruptcy until after divorce, or to avoid bankruptcy altogether. The timing of bankruptcy is also important. We can refer you to a knowledgeable bankruptcy lawyer to address these issues in depth.
Debra R. Schoenberg is a certified specialist* who has assembled an experienced and talented team of divorce attorneys. To discuss bankruptcy and divorce under your specific circumstances, please contact us online, or call us at 415.834.1120.
* Certified in Family Law by the State Bar of California Board of Legal Specialization.
