The Law Office of Kurt H King

January 7, 2011

Bankruptcy and Divorce in Missouri

Filed under: Bankruptcy,Divorce,Family Law — kurthking @ 6:07 pm
Tags: , ,

Many spouses in broken marriages face filing (1) Chapter 7 bankruptcy and (2) for divorce. When couples divorce, many lack enough income to pay his/her share of the bills/debts. Should they file bankruptcy first, or start with the divorce, or do both at once?

Here are some considerations:

1. A husband and wife can file bankruptcy together in a single case. After the divorce, the couple are no longer married and each has to file their own bankruptcy case which doubles the total cost in attorneys fees and court filing fees. With attorneys fees of up to $2000 per case (or more) and a filing fee now of $299, it saves money to file 1 case instead of 2.

2. Can the couple agree/cooperate well enough to file the bankruptcy together? If not, then he/she will have to file bankruptcy separately. Preferably he/she/each files before the divorce so all the debts of the person filing are wiped out by the bankruptcy, making it easier to settle or for the judge to decide the divorce case because it is often more simple to divide property than it is to divide both property and the debts.

3. Also, it may be better to discharge the debts in Chapter 7 bankruptcy before filing for divorce, because divorce cases which address division of debts typically call for for each spouse to pay some of the joint debts, and to indemnify/reimburse the other spouse if the creditor collects from the other spouse who was NOT ordered to pay the debt. These indemnity provisions generally do NOT go away in Chapter 7 bankruptcy cases, which, means that one spouse could be forced to repay the other ex-spouse after the divorce. It is better to wipe out these debts with bankruptcy before divorce to reduce the exposure to having to indemnify an ex-spouse for joint debt the court ordered you to pay and hold harmless/indemnify.

4. Can the divorce and the bankruptcy cases run at the same time? Yes they can both be filed and pending in court at the same time, but when division of property is involved, the automatic stay in bankruptcy law (11 U.S.C. 362(b)(2)) will put a stay/stop on the divorce case as far as property until the bankruptcy court determines what property goes to creditors. A bankruptcy case with no assets for creditors takes 3 months or more, so considerable delay can result while the spouses wait to get divorced.

5. There are many other factors such as the incomes of the parties and whether their combined or separate incomes are too great to qualify under the means test of Chapter 7; who has filed bankruptcy before, what chapter of bankruptcy, and how long ago (8 years or more?); etc.

These are thorny questions for you and your attorney.

Kurt H. King
Law Office of Kurt H. King
20 E. Franklin
Liberty, Clay County, Missouri 64068

Bankruptcy, Child Custody and Support, Divorce and Modification, Family Law
Personal Injury, Workers’ Compensation

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