As the old saying reminds us "When it rains it pours," and this principal is sometimes demonstrated by people ,who need to file bankruptcy, while they are also going through a divorce. Whether the financial problems contributed to the marital difficulties or the marital breakup aggravated their inability to balance the family budget, the couple often face the practical question of whether they should file for bankruptcy before or after they complete the divorce.
There are several factors to take into consideration in making this decision.
By filing bankruptcy first a couple can often eliminate most of their debts, and since the parties no longer have to argue about which spouse will be responsible for which debt this can simplify the divorce process. Also as long as they are still married a couple can file a joint bankruptcy rather than two individual bankruptcies, which can cut their bankruptcy court costs and attorney fees in half. This fee reduction can result in a significant savings for people under financial stress.
On the other hand the law requires that individuals with larger incomes file a Chapter 13 Bankruptcy rather than a Chapter 7 Bankruptcy which can prove far more expensive for the Debtor.
This determination is made by a mathematical formula known as the "means test". Since the means test is calculated based on the income of the household, the result will be different before and after a couple separates, and the Debtors can sometimes avoid the Chapter 13 by waiting
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