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Home > Blog > Bankruptcy and Debt Relief > Is Divorce Affected by Bankruptcy?

Is Divorce Affected by Bankruptcy?

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It’s an unfortunate truth, but many divorces are the fault of money. Financial stress puts strain on the relationship, and for some, that strain can break a marriage. While you’re dealing with your divorce proceedings, your debt might be too much to handle.

But is divorce affected by bankruptcy? The short answer is yes. Both are legal procedures that affect your assets, and this will be especially important if you plan to liquidate those assets. Some of the major actions that will protect you from creditors may also slow parts of your divorce.

If you’re going through a divorce and filing for bankruptcy, consider the effects bankruptcy will have before you file.

Bankruptcy Can Affect the Division of Property

When you prepare for a divorce, you’ll need to determine who will walk away with what. Indiana defaults to an even split of assets, but that might not be fair or reasonable in your case, especially if large amounts of debt are involved. The property split might need to be uneven so you and your former spouse can handle your separate debts.

When you’re also filing for bankruptcy, however, those assets will be affected. The purpose of filing for bankruptcy is to become debt-free, so debt-collection efforts and division of property can be paused until you’re given permission to continue the division of property or until any nonexempt assets are sold.

The automatic stay you get when you file for bankruptcy mainly prevents creditors from pursuing repayment from you, but  it can make the divorce process even longer.

Some Debts Are Unaffected

While the purpose of filing for bankruptcy is to remove debt, certain debts gained through your divorce won’t be affected. Regardless of your bankruptcy status, you’ll be responsible for these debts.

For example, let’s say you chose a Chapter 7 bankruptcy plan, which sells all nonexempt assets and divides the money among the creditors. But during the process, you also filed for divorce, and you’re now paying child support.

Child support and alimony are both debts that cannot be removed by filing for bankruptcy. If you’re not sure which debts you’ll be left with, speak with a lawyer about your case. We can review your debts and what may be left when you file for bankruptcy after or during your divorce.

Bankruptcy Can Complicate Your Divorce

Unfortunately, it’s not easy to handle your divorce and your debts at the same time. Divorce is affected by bankruptcy. Bankruptcy proceedings can drag the divorce out when you’re already under pressure and emotionally drained.

If you’re considering bankruptcy, divorce, or both, consult with Rowdy G. Williams Law Firm first. Our lawyers can guide you through the relevant legal processes and show you exactly how your cases will be affected if you file them at the same time. For help preparing for divorce and bankruptcy, call us at 812-232-7400 or fill out the online contact form below.

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