What Should You Know About Bankruptcy and Divorce in Texas?

 Posted on October 27, 2023 in Bankruptcy And Divorce

Going through a divorce while also facing bankruptcy can add extra layers of complexity to an already difficult situation. If you find yourself in this position, you should know some key things about bankruptcy and divorce. A Texas lawyer can help you with this process.

File Divorce First

It is usually recommended to file for divorce before filing for bankruptcy when possible. This allows you more flexibility in structuring debt division in the divorce settlement. Marital debts can be divided equitably before bankruptcy discharges them.

Joint Bankruptcy Has Pros and Cons

Filing a joint bankruptcy petition with your spouse has some potential advantages. Your combined assets and debts are considered, potentially yielding a faster discharge of debt. However, this requires a high level of cooperation and trust with your soon-to-be ex-spouse, which may not be realistic.

Your Spouse’s Bankruptcy Impacts You

If your spouse files bankruptcy, it can impact any joint accounts and community property assets. Exemptions differ between joint and individual filings. Your spouse’s bankruptcy can also affect creditors’ ability to collect from you.

Alimony, Child Support, and Property Division

Alimony, child support, and most property divisions stemming from divorce are not dischargeable in bankruptcy. The court will ensure these obligations continue regardless of bankruptcy filings. Your attorney can help you sort all of this out in your best interest.

Timing Matters

If you receive a property settlement or divorce decree within 180 days before filing bankruptcy, those assets may be considered part of your bankruptcy estate. Timing is important, so work closely with attorneys for both proceedings.

Protect Exempt Assets

Texas has generous exemptions to protect property like home equity, vehicles, retirement plans, and personal property in bankruptcy. Use exemptions fully to your advantage during divorce and bankruptcy processes. Your lawyer can help you determine which ones you could potentially use.

Contact a New Braunfels, TX Bankruptcy Attorney

Navigating bankruptcy and divorce simultaneously is tricky. Working with a Boerne, TX bankruptcy lawyer is beneficial for both areas to protect your interests in each proceeding. With proper legal advice, you can achieve the best possible outcome.

With the proper legal guidance, you can successfully complete both processes and move ahead with your financial and personal life. Call Law Offices of Chance M. McGhee at 210-342-3400 for a free consultation and see what the best next step you should take for your specific scenario. We will help ensure your best interests are taken care of.