If financial issues contributed to the end of your marriage, you’re not alone. A little under a quarter of divorces are caused by money problems and/or disagreements between spouses involving money.
Therefore, it’s not surprising that many couples face the possibility of divorce and bankruptcy at the same time and wonder which process they should address first. Whether you file for divorce or bankruptcy first will depend on your particular situation.
Divorce before bankruptcy
If you and your spouse have a healthy combined income, this may be the preferable order — particularly if you want to try to qualify for Chapter 7 bankruptcy. Your combined income may be too high to qualify, but you may each be able to qualify based on your individual incomes following divorce.
Bankruptcy before divorce
If the two of you jointly file for bankruptcy before divorcing, you can save on filing costs and attorney fees since you’ll have one bankruptcy rather than two. Further, if you file jointly, you may be able to exempt more of your property from being sold to pay your debts.
Before you choose a course of action, it’s essential to look at your debts and determine which are marital debts and which are owed individually. Since Colorado is an equitable distribution state as opposed to a community property state, however, spouses aren’t assumed to be equal owners of marital property or debt.
It’s best to review your situation with a Colorado bankruptcy attorney, as well as a family law attorney, before making any decisions. Some attorneys are experienced in both bankruptcy and family law. You can simplify matters by having an attorney who knows both of those fields and the relevant state laws.