Bankruptcy and divorce often go hand in hand in Illinois. At Lois Kulinsky & Associates, Ltd., we understand that debt is common in a divorce situation. Every situation is unique and bankruptcy laws are firm, so it is important to know what you may face when filing whether it is before or after a divorce.
Sometimes it is best to wait until after the divorce to file. There are financial limits on filing a Chapter 7 bankruptcy. If together, you earn too much to file Chapter 7, then waiting until after the divorce makes more sense. If debts are mainly in only one of your names, then only that person would need to file, so you should wait until the divorce is final. On the other hand, if your debts are mainly joint debts, then it is probably best to file before your divorce because you will both need to claim bankruptcy to fully get rid of your financial obligations. In addition, filing together saves money because it is one case instead of two if you were to file separately.
Filing together may also prevent some issues. According to Illinois Legal Aid, there are only certain assets that are exempt, so if you received assets in the divorce, they could be seized to repay your debts, such as your home or vehicle if they are not completely paid off. If you are ordered to provide your ex-spouse with a vehicle and it gets seized in the bankruptcy, then you could face problems because obligations stated under your divorce also cannot be discharged.
If you are filing after your divorce is final, it is important to note that you cannot have child support or alimony discharged in your bankruptcy. Any wage garnishments for such payments will continue and will not be stopped by filing. For more information about bankruptcy and divorce, visit our website.