If you are thinking about filing for divorce in Michigan, and you are also struggling with your finances, you may also be considering personal bankruptcy. However, if you are planning to file for divorce and bankruptcy in Michigan, or if you recently filed for bankruptcy and are now thinking about divorce, there are some important things you should know before you begin either legal process. The following are five things to know about divorce and bankruptcy.
Divorce and Financial Problems Often Occur Together
Studies often show that financial problems can place an incredible strain on a marriage and that financial problems can lead to divorce. For example, an article in Business Insider explains that financial difficulties are often the leading cause of divorce. So, if you are thinking about both bankruptcy and divorce, you should know that you are not alone. Many people in Michigan and across the country are struggling with financial problems while also contending with incredible difficulties in their marriages.
Divorce Could Interrupt an Existing Chapter 13 Bankruptcy Case
If you recently filed for Chapter 13 bankruptcy, it is essential to know that filing for divorce could interrupt the terms of your Chapter 13 bankruptcy case. Michigan is an equitable distribution state, which means that all marital property will be divided between the parties as part of the divorce. If you are making payments on a debt reorganization plan and any of that debt is classified as marital property, it will need to be divided appropriately. As such, the terms of the Chapter 13 repayment plan could become complicated and, in many cases, interrupted. In short, if you file for divorce after filing for Chapter 13 bankruptcy, your bankruptcy case could be in jeopardy.
If You are Planning to File for Chapter 13 Bankruptcy, it is Probably Best to Wait Until After Your Divorce
Given the information above about timing for Chapter 13 bankruptcy and divorce, if you are planning to file for Chapter 13 bankruptcy, it likely makes the most sense to wait until after your divorce. While it is important to seek advice from a lawyer no matter what you are planning with regard to divorce and bankruptcy, generally speaking, most people divorce before Chapter 13 bankruptcy. Since Chapter 13 bankruptcy repayment plans typically last three to five years, you will likely want to avoid being involved in a longer repayment plan with your spouse.
If You are Planning to File for Chapter 7 Bankruptcy, You Should Consider Doing So Before Your Divorce
Unlike Chapter 13 bankruptcy, it usually makes the most sense to file for Chapter 7 bankruptcy before filing for divorce. Since marital assets and debts will need to be divided, having most if not all of those discharged in a Chapter 7 bankruptcy proceeding could make the divorce process much quicker and could allow the parties to get a fresh start in terms of their finances and their relationship.
You Should Know Whether You Plan to File for Bankruptcy Individually or with Your Spouse
While it often makes sense to file for Chapter 7 bankruptcy prior to divorce, things can get complicated if you have marital debts but your spouse does not want to file for bankruptcy.
Contact a Michigan Divorce Lawyer for Assistance
If you have questions about your financial situation and how it relates to your plans for divorce, it is important to speak with a Michigan divorce lawyer as soon as you can. An advocate at our firm can answer your questions today. Contact the Law Offices of Michael A. Robbins to learn more about our services.