Will divorce take my name off of the mortgage or other debt?
No. In divorce, debts can be split between spouses, but the agreement is between the individuals and does not involve the creditors. The creditors can still look to either individual for repayment. So for example, Harry and Sally can agree that Harry will pay off all of their shared credit card debt. However, if Harry stops paying the credit card debt, the credit card companies can still come after Sally for repayment.
In order to get rid of your liability from shared credit card debt, you could have your ex-spouse transfer the balance over to a credit card that is solely in his or her name. To get rid of your liability on a mortgage, your ex-spouse would need to refinance the loan so that it’s solely in his or her name or you sell the property.
Should we file for bankruptcy before or after the divorce?
Generally, it is better to file joint bankruptcy before filing for divorce. This will simplify your divorce because you will have less or no debt to divide in the divorce proceedings. Also, filing jointly reduces filing fees and attorneys fees. You cannot file joint bankruptcy after divorce.
There are, however, some situations where bankruptcy should come after the divorce. One example would be if your joint income would disqualify you in the means test but you would qualify if you filed separately (please see our FAQ section for more on the means test). For example, Harry’s gross annual income is $65,000 and Sally’s gross annual income is $45,000. Harry and Sally have two children that they support. If they filed jointly prior to getting a divorce, they may not pass the means test, since the median income for a household of four is $79,971 and together they earn $110,000. However, if Harry and Sally divorced, and Harry supported the two children, Harry and Sally would both easily pass the means test. This is because Harry’s income of $65,000 is less than $70,684, the average income for a household of three and Sally’s income of $45,000 is less than $49,182, the average income for a household of one.
Can I file for legal separation while my bankruptcy case is pending?
You may file for legal separation at any time, before or after filing for bankruptcy. However, the family court won’t have the jurisdiction or authority over your household finances until after your bankruptcy has been dismissed or you receive your discharge.
As noted above, it is chepaer and easier for spouses to file jointly for bankruptcy, but you do have the option of filing separately whether you are living apart and/or still married. Again, keep in mind that a nonfiling (ex)spouse would still be on the hook for any joint debt and his/her own debt.
If you are contemplating bankruptcy or need other assistance dealing with your debt, please email us at firstname.lastname@example.org.