Divorce and Bankruptcy: When to File and What You Risk

One in three Americans filing bankruptcy is also dealing with a divorce or recent separation. That's not a coincidence. Legal fees, split households, and tangled finances create the exact conditions that push people toward Chapter 7 or 13.

The question isn't whether you need both. It's which one you file first.

Why the Order Matters

Bankruptcy and divorce both reorganize your financial life. When they collide, timing determines what you keep, what you owe, and how long the mess drags on.

File bankruptcy first, and you might eliminate debt before dividing assets. File divorce first, and you risk taking on obligations you can't discharge later. File during divorce, and you complicate both proceedings.

Start by looking at three factors: your property, your debts, and whether you and your spouse can still cooperate on paperwork.

Filing Bankruptcy Before Divorce

This works when you and your spouse can still stand being in the same room. A joint Chapter 7 filing before divorce can wipe out shared credit card debt, medical bills, and personal loans in three to four months. You split legal fees. You use one set of exemptions. And you enter the divorce with a cleaner balance sheet.

But timing is tight. If your state requires a separation period before divorce, you can file jointly during that time. Once the divorce is final, joint filing is off the table.

What Gets Easier

Property division becomes simpler when debt is gone. You're not negotiating who takes the Visa bill or the hospital debt. Courts care about assets. Debt clouds that picture.

Joint filing also costs less. One filing fee ($338 in 2025), one credit counseling course, one set of forms. Compare that to two separate filings at $676 total.

What Gets Harder

You need cooperation. If your spouse won't sign forms or show up for the 341 meeting, the case stalls. And if one of you has significantly higher income, you might not qualify for Chapter 7 under the means test when filing jointly.

Once you file, the automatic stay freezes your finances. You can't sell property or move money without trustee approval. That includes steps you'd normally take during divorce.

Filing Bankruptcy During Divorce

This is where things get messy. Divorce courts and bankruptcy courts both want control over your assets. Bankruptcy's automatic stay can pause your divorce proceedings. Your divorce attorney and bankruptcy attorney need to coordinate. Mistakes compound.

Some divorce courts will pause financial matters while bankruptcy proceeds. Others push forward on custody and separation but freeze property division. You're paying two sets of legal fees with no clear timeline.

When It Still Makes Sense

If creditors are suing you or garnishing wages during divorce, bankruptcy stops that immediately. The automatic stay buys you breathing room. You can then finish bankruptcy, discharge debts, and return to divorce with a clearer picture.

Another scenario: your spouse files bankruptcy mid-divorce to protect assets or delay proceedings. You may need to file your own case to level the field.

Filing Bankruptcy After Divorce

This is the cleanest path for most people. Your finances are separated. Your obligations are defined in the divorce decree. You know exactly what you owe and what you own.

Chapter 7 typically takes three months. You can discharge credit card debt, medical bills, and personal loans assigned to you in the divorce. But you cannot discharge alimony, child support, or property division debts labeled as support.

What You Can and Can't Discharge

Domestic support obligations are untouchable. That includes court-ordered spousal maintenance and child support. Bankruptcy law treats these as priority debts. They survive Chapter 7 and must be paid in full under Chapter 13.

Property settlement debts are trickier. If your divorce decree says you owe your ex $10,000 for their share of the car, that's a property debt. In Chapter 7, it's non-dischargeable. In Chapter 13, you can discharge it after completing your repayment plan.

Joint debts present a third problem. You and your ex both signed the credit card. The divorce decree says your ex is responsible. You file bankruptcy and discharge your obligation. The creditor can still come after your ex. Your discharge doesn't protect them.

Chapter 7 vs. Chapter 13 in Divorce

Chapter 7 moves fast but offers limited debt relief. Chapter 13 takes three to five years but lets you discharge certain divorce-related property debts.

Chapter 7 After Divorce

You qualify if your income falls below your state's median or you pass the means test. Most people filing post-divorce have lower income due to single-earner households and ongoing support payments.

The trustee liquidates non-exempt assets to pay creditors. Your exemptions protect essentials: a modest car, household goods, retirement accounts. If you got the house in the divorce, your homestead exemption matters. In Texas, you can protect unlimited home equity. In Alabama, $15,500.

Chapter 7 doesn't touch alimony or child support. If those are your biggest obligations, bankruptcy won't help.

Chapter 13 After Divorce

This makes sense when you have regular income and need to discharge property settlement debts. Your repayment plan prioritizes support obligations and secured debts like your mortgage. Remaining income goes toward unsecured debts, including property settlements.

Once you complete the plan, property settlement debts are discharged. But you're committing to three to five years of payments. If your income drops or you miss payments, the case gets dismissed and creditors come back.

Protecting Your Assets

The bankruptcy trustee looks at everything you own on the filing date. That includes property you received in the divorce settlement.

If you got the house, use your state's homestead exemption. If you got retirement accounts, those are typically fully exempt under federal law. Personal property like furniture and cars are protected up to your state's exemption limits.

Transferring assets before bankruptcy to avoid the trustee is fraud. Courts look back at transfers made in the two years before filing. If you sold your ex the car for $1 to keep it out of bankruptcy, the trustee can undo that transfer.

Joint Debts and Your Ex's Credit

Your bankruptcy discharge protects you. It does nothing for your ex.

Take a joint credit card with a $15,000 balance. Your divorce decree assigns the debt to your ex. You file bankruptcy and discharge your obligation. The credit card company can still sue your ex for the full $15,000.

Some people file bankruptcy specifically to protect an ex-spouse. If you're the higher earner and took on most of the debt in the settlement, discharging it might be part of your plan. But tell your ex first. Surprises breed lawsuits.

When to Talk to an Attorney

You need legal help if you're facing both proceedings at once. Divorce attorneys understand family law. Bankruptcy attorneys understand discharge rules. Few specialize in both. You might need to hire two lawyers who coordinate.

Red flags that require immediate legal advice:

• Your spouse filed bankruptcy mid-divorce and you don't know how it affects your case
• You're assigned debts in the divorce decree that you can't pay
• Creditors are suing you for joint debts your ex was supposed to pay
• You own a business or complex assets like rental property
• Your spouse is hiding assets or income

If you're just trying to figure out whether to file and when, start with a free consultation. Most bankruptcy attorneys offer them. Explain your divorce timeline, your debts, and your income. Ask directly: should I file before, during, or after?

If you're ready to explore bankruptcy and need help determining eligibility, you can answer a few questions here to see if Chapter 7 or 13 fits your situation.

Common Mistakes to Avoid

Filing too soon. If you file bankruptcy while still married and then get divorced three months later, your ex might have claims on property the trustee already liquidated.

Assuming the divorce decree protects you. It doesn't. If your name is on the debt, you're liable until you discharge it in bankruptcy.

Hiding the bankruptcy from your divorce attorney. These cases overlap. Both lawyers need the full picture.

Using joint assets to pay debts right before filing. Trustees scrutinize transactions in the 90 days before bankruptcy. Paying your ex $5,000 from your checking account might look like a preferential transfer.

Waiting too long. If creditors sue you and win, they can garnish wages or levy bank accounts. Filing bankruptcy stops that, but you've already lost time and money defending lawsuits.

What Happens to Alimony and Child Support

These obligations are untouchable. Bankruptcy law prioritizes them above nearly all other debts. In Chapter 7, they're never discharged. In Chapter 13, they're paid in full before other creditors see a dime.

If you owe back support, the automatic stay doesn't stop collection. Child support enforcement agencies can still garnish wages, intercept tax refunds, and suspend licenses during your bankruptcy case.

If you're receiving support, your ex's bankruptcy doesn't stop payments. They still owe you. If they stop paying, you can file a motion in family court for contempt.

State Law Variations

Community property states treat marital assets and debts differently. In California, Texas, and seven other states, most property acquired during marriage is jointly owned. Bankruptcy filed by one spouse can affect the other's property even after divorce.

Exemptions vary wildly. Florida and Texas protect unlimited home equity. New York protects $197,000 for a couple. If you got the house in the divorce, check your state's homestead exemption before filing.

Some states allow you to choose between state and federal exemptions. If you're filing post-divorce and keeping limited assets, federal exemptions might offer better protection.

How Long the Process Takes

Chapter 7 takes three to four months from filing to discharge. If you file after divorce, that's your timeline. If you file before, the divorce proceeds once bankruptcy is done.

Chapter 13 takes three to five years. Filing before divorce means your spouse is involved in your financial decisions for that entire period. Courts rarely approve this. Filing after divorce keeps the cases separate.

When to File First

File bankruptcy first if you and your spouse can cooperate, most of your debts are joint, and neither of you has significant separate property. A joint Chapter 7 clears the deck.

File divorce first if cooperation is impossible, your debts are mostly separate, or you have complex assets that need court-supervised division.

If you're not sure, read more about the bankruptcy process and talk to an attorney who handles both. The right sequence saves money, time, and future legal headaches.