What Happens If I File for Bankruptcy While We Are Getting Divorced?

Filing for divorce is a life-changing event. If you suffer some other setbacks during the proceedings, you may need to consider filing for bankruptcy while getting divorced. You might be unsure how this works, though. Typically the automatic stay goes into effect if you file bankruptcy. However, the automatic stay specifically except proceedings to enter a divorce decree, determine child custody and child support, and determine alimony. Those claims can proceeds regardless of a bankruptcy filing. However, any claims relating to the division of property or debts are automatically stayed upon filing. The bankruptcy court must first modify the automatic stay in order for that claim to proceed, and may determine the ultimate effect of any property division. 

Learn more about what may happen when you file for bankruptcy while getting divorced.

Filing for Bankruptcy With Joint Debts

One common reason people file for bankruptcy is significant debt. If you have joint debts accumulated with your soon-to-be-ex-spouse, determining how to divide the debt is a key aspect of the divorce negotiations. Similar to the division of marital assets, joint debts must be divided. 

When you are filing for bankruptcy while getting divorced, this could affect the division of joint debts. 

If both you and your spouse’s names are part of the joint debt, you could attempt to receive a discharge of your responsibility for the debt. However, the creditors might still be able to pursue repayment from your ex-spouse for joint debt. 

Some joint debts may involve debts you cannot discharge when filing for consumer bankruptcy. These include:

• Child support payments owed
• Income taxes
• Student loans from federal or private lending sources

Ultimately, if you are filing for bankruptcy while getting divorced, the bankruptcy process could affect your spouse’s debt obligations. This means that your spouse has a remaining financial connection to you when you choose to file for bankruptcy.

Filing for Bankruptcy With Individual Debt

North Carolina divorce law recognizes separate property during divorce proceedings. This typically allows each spouse to retain possession of any assets they held before marriage. While debts may be divided into separate debts and marital debts by the domestic court, the bankruptcy court looks solely to who incurred the debt in determining how it is treated in bankruptcy court. 

Your bankruptcy attorney can provide advice on how this situation may affect you.

Let Us Help You Decide Whether Filing for Bankruptcy While Getting Divorced Is a Good Path Forward

At Biggs Law Firm, we handle family and domestic law cases as well as consumer bankruptcy cases. We are ready to help you decide whether filing for bankruptcy before, during, or after getting divorced is smart. Our attorneys may be able to suggest other steps you can take outside of a bankruptcy petition right now.

We are ready to serve you with the legal services you need for divorce or bankruptcy. To learn more about how we can help you in this situation, call us today at 919-375-8040.