It is not uncommon for a married couple to fight about money. This can happen for a variety of reasons including different styles of handling money or stress due to a lack of money or other financial challenges. Regardless of the reason, when a couple faces both the end of their marriage and the possible need to file bankruptcy at the same time, they will need to decide which to do first.
As explained by SoFi, managing debt during a divorce takes some understanding of how creditors view responsibility for joint debt relative to how a decree may outline it. A divorce decree may outline responsibility for debts to each spouse, but if both spouse’s names remain on an account, the creditor may pursue repayment from both parties.
Another important factor to address is the legal date of separation as this may determine the date before and after which any debt incurred may be considered joint or individual debt. Getting a clear picture of each person’s individual debt and assets and the couple’s joint debt and assets is important when evaluating the type of bankruptcy plan that may be best for the situation.
My Horizon Today recommends also that couples be honest about their ability to work together to complete a bankruptcy as this may well dictate the timing of the bankruptcy relative to the timing of the divorce. In a highly adversarial situation, it may be wise to complete the divorce first and then allow each spouse to separately address their debt assistance or bankruptcy needs and options.