man filing for bankruptcy with attorney

The Pros and Cons of Filing for Bankruptcy Before Your Divorce

When facing the challenging intersection of divorce and financial distress, individuals often find themselves at a crossroads, pondering whether to file for bankruptcy before proceeding with their divorce proceedings. This critical decision can have far-reaching legal, financial, and personal implications for all parties involved. It’s important to examine the various considerations, both advantageous and disadvantageous, that accompany the choice of filing for bankruptcy before starting the divorce process to make an informed decision.

Legal Factors


Filing for bankruptcy before your divorce offers substantial legal benefits. One of the primary advantages lies in streamlining the property division process. By discharging or reducing shared debts through bankruptcy, the complexity of dividing assets diminishes significantly. This simplification allows for a more equitable distribution of property, reducing the potential for contentious disputes during divorce proceedings.

Moreover, the option of a joint bankruptcy filing is particularly advantageous for married couples facing financial difficulties. This approach not only saves money on legal fees but also accelerates the resolution of financial matters. By addressing financial issues efficiently, it enables both parties to move forward with their separate lives more swiftly and with a clearer financial slate. These legal advantages can greatly alleviate the stress and uncertainty associated with the intersection of bankruptcy and divorce, making it a viable option for many couples.


There are also potential challenges associated with filing for bankruptcy before divorce that should be considered. One significant drawback is the potential delay it can introduce into the divorce process. The automatic stay triggered by bankruptcy temporarily halts divorce proceedings, adding time and complexity to an already emotionally taxing situation. This delay can be frustrating and may hinder both parties from moving forward with their lives.

Another legal challenge to consider is that not all debts may be dischargeable after divorce. While bankruptcy can alleviate or eliminate many financial obligations, certain types of debts, such as child support, alimony, or property settlements, are generally non-dischargeable. This means that even after bankruptcy, both parties may remain responsible for these financial obligations, adding complexity to post-divorce financial arrangements. It’s essential to carefully evaluate these potential legal hurdles when making the decision to file for bankruptcy before divorce, as they can have significant implications for both parties involved.

Financial Factors


The financial advantages of considering bankruptcy before divorce are noteworthy. One of the most compelling benefits is the potential to reduce or even eliminate debts. By discharging or reducing shared debts through bankruptcy, both parties can experience a considerable relief in their financial burden, providing a more stable financial foundation as they embark on separate paths post-divorce.

Moreover, the cost-effectiveness of joint bankruptcy filings should not be underestimated. This approach typically involves lower fees and streamlined processes compared to two separate filings. It not only saves money but also expedites the resolution of financial matters, allowing divorcing individuals to transition to their new financial lives more efficiently. These financial advantages can offer a lifeline to those facing the intersection of bankruptcy and divorce, helping them regain control over their finances and providing a more secure footing for their post-divorce future. 


Potential financial drawbacks also exist if one chooses to file for bankruptcy before divorce. One concern is the impact on credit scores. Filing for bankruptcy can have a negative effect on the credit scores of both parties, potentially limiting their ability to secure loans, obtain credit, or make significant financial decisions in the future. This should not be taken lightly, as good credit is vital for many aspects of modern financial life.

Additionally, any debts that might be incurred after the bankruptcy discharge, but before service of divorce paperwork, could still be considered community debt, despite only being incurred by one of the parties.

Furthermore, there’s the inherent risk of asset liquidation to satisfy creditors. In bankruptcy proceedings, certain assets may need to be sold to pay off outstanding debts, potentially leading to the loss of valuable property or assets that individuals may have wanted to retain. This risk can be particularly concerning if there are sentimental or essential assets involved, such as a family home or business. Thus, it’s crucial to carefully evaluate these financial cons alongside the potential benefits before deciding whether to proceed with bankruptcy before divorce.

Personal Factors


When considering bankruptcy before divorce from a personal perspective, it’s important to acknowledge the emotional relief it can provide. Addressing financial stress and burdens can alleviate emotional strain during what is already a challenging time. Furthermore, it allows both parties to envision a fresh start post-divorce, unburdened by overwhelming debts and financial obligations. These personal benefits can contribute significantly to the overall well-being of individuals navigating the complexities of divorce and bankruptcy. 


On the downside, pursuing bankruptcy before divorce has the potential to introduce additional stress and complexity into an already emotionally charged situation. The stigma associated with bankruptcy might lead to feelings of discomfort or embarrassment for some individuals, impacting their self-esteem and social relationships. It’s important to consider how these personal factors may affect your emotional well-being both positively and negatively when navigating the intersection of bankruptcy and divorce.

Get Help Weighing the Pros and Cons

The decision of whether to file for bankruptcy before your divorce is a complex one that deserves careful consideration. To make an informed choice tailored to your unique circumstances, it is advisable to seek the guidance of legal professionals experienced in both bankruptcy and family law matters. Our dedicated team at Cohen Family Law is here to provide you with expert counsel and support, ensuring that your path forward aligns with your best interests. Contact us today to explore your options during this challenging time.