Should We Declare Bankruptcy During Our Illinois Divorce?

 Posted on October 21, 2021 in Divorce

Financial conflict is one of the most common reasons for divorce in Illinois. Whether one spouse is a spendthrift, is chronically unemployed, or the stress of managing a household’s finances is simply too great, couples frequently get divorced because of money issues. 

Sometimes a couple’s financial problems are so great that they find themselves considering bankruptcy at the same time that they are ending their marriage. In Illinois, the law allows spouses to get divorced and file for bankruptcy simultaneously, but doing so is not necessarily a good idea. In this blog post, we will examine common strategies for combining bankruptcy and divorce, but it is important to speak to a qualified attorney about your questions. 

Should We File for Bankruptcy or Divorce First?  

The extent to which spouses have ended their relationship will have some effect on whether they should file for bankruptcy at the same time as they file for divorce. If you have already moved out and are managing your finances separately, it may affect your ability to file for Chapter 7 bankruptcy and it could be best to wait until after the divorce is over. 

On the other hand, filing for bankruptcy before divorce allows spouses to settle their debts and assets, making the asset division process during divorce faster and less expensive. Married spouses can file jointly for bankruptcy, which allows them to double property exemptions and potentially keep more assets. It also gives spouses the benefit of a third party helping to administer debts, which can be helpful in situations involving domestic violence or other power imbalances. 

What Happens if Divorce and Bankruptcy Happen at the Same Time? 

Bankruptcy is a federal process and as such, it is given priority over divorce, which is a state process. Bankruptcy courts have the authority to require debts to be managed before the divorce can be finalized, potentially delaying the divorce. Divorce courts may still address non-financial aspects of the divorce, but the divorce may not be finalized until the bankruptcy process has ended. 

Consult with a Naperville, IL Divorce Attorney

The prospect of handling divorce and bankruptcy at the same time can seem daunting, but with the help of an experienced DuPage County divorce attorney at Calabrese Associates, P.C., you can manage your finances and your divorce together. Our skilled attorneys will help you navigate your options and create a holistic strategy for divorce. Schedule a confidential consultation today and find out what we can do for you. Call our offices at 630-393-3111. 

Source:

https://www.ilga.gov/legislation/ilcs/ilcs4.asp?DocName=075000050HPt%2E+V&ActID=2086&ChapterID=59&SeqStart=6200000&SeqEnd=8675000