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Filing for Bankruptcy During a Divorce Proceeding

Consider your options very carefully regarding divorce and bankruptcy. While both to some degree serve similar purposes, aspects of both niches are completely different. Bankruptcy is obviously about debts, whereas divorce is about distribution of debts, property, assets, children and support. Bankruptcy can streamline issues of due

Dog with Money

Stop Sign

process and even calm some emotions down when it comes to divorce, but in no way does it make divorce move a lot smoother. In actuality, it can delay it.

According to the bankruptcy code, automatically the filing can "halt" a divorce action. It's part of bankruptcy law. Think of it as a way of trumping divorce law. They call it an "automatic stay," in fact, where the action of filing for bankruptcy must first be resolved before even going through with a divorce. Of course, a soon-to-be divorced couple may obtain permission from the bankruptcy court to continue on with the proceeding of a divorce, but it's not a guarantee, especially if there's a great deal of debt to consider between the two parties.

It is true, however, that non-financial issues can continue on as part of a divorce proceeding. That can involve child custody, living arrangements and even changing the last name. Issues regarding spousal support, though, can't be resolved until the issue with bankruptcy has been finalized.

Even child support, though, can continue as recorded by friends of the court and other child support enforcement units given the fact that technically child support payments are not dischargeable under bankruptcy law. Bear all of that in mind as you consider filing for bankruptcy during a divorce.