Bankruptcy and Divorce in North Carolina

If someone is considering a divorce as well as a bankruptcy filing, it’s important that he or she determines which action to take first. Individuals who file for bankruptcy at the wrong time could end up on the hook for a spouse’s debts, even if they have discharged their own. Whether it’s better to start with the bankruptcy or divorce will depend on a person’s situation.

If both spouses have debt and agree to file for bankruptcy, this is generally best done before a divorce. However, if both people cannot agree to file for bankruptcy, filing after a divorce is completed may be the best way to go. Individuals who file for bankruptcy alone and then file for divorce may still find themselves having to pay off the spouse’s obligations because the asset division process assigned them some of their spouse’s debt.

Another instance where someone may want to file for bankruptcy after a divorce is when they owe money and their spouse has a large income. If people exceed a certain household income, they may not be eligible for a Chapter 7 bankruptcy filing, which would normally allow them to discharge their debts without an obligation to pay them back.

When individuals go through a divorce, they may be able to settle certain important issues through negotiation or mediation. However, if a couple is not able to agree on matters like asset division, custody or spousal support, they may end up having to litigate their divorce. A lawyer could explain how the law determines issues related to a divorce and represent someone in court.