Suppose you are a South Florida couple thinking about obtaining a divorce in Broward County, but you have been falling deeper and deeper into debt since you got married. Which should you file for first: bankruptcy or divorce? Theoretically, it is easier to file jointly for bankruptcy first, and then seek a divorce in Fort Lauderdale. This is because after filing for joint bankruptcy the couple’s debt is cleared, thus leaving one less thing to argue about during the divorce in the Seventeenth Judicial Circuit Court.
However, in practice, filing for joint bankruptcy first may not be in the parties’ best interest. First, the parties must be able to get along well enough to do so, as well as trust each other to list all of their assets and liabilities correctly. Second, if one spouse has openly committed fraud, then the couple will want to file separately so that the innocent spouse is not bothered by problems that will arise regarding discharge of the other spouse’s debt.
Because each marriage presents unique situations and circumstances, it is best to consult with an attorney before filing for either bankruptcy or divorce. Despite the ease associated with filing for joint bankruptcy first; nevertheless, there are a variety of financial considerations that could make filing for divorce first a wiser decision for the couple.
If you happen to be on the verge of bankruptcy as well as divorce, and you decide to file for divorce first, it is wise to pre-empt your spouse’s petition for bankruptcy with specific clauses in the marital settlement agreement. Such provisions should specify that in the event of bankruptcy after the dissolution of marriage, the bankrupt spouse must indemnify the other against creditors. So even if the bankrupt spouses’ personal debts are cleared, this spouse cannot avoid the creditors who come after the marital debts.
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