Kristopher K. Greenwood & Associates
Salt Lake City – Ogden
Kristopher K. Greenwood & Associates

Salt Lake City – Ogden

We Fight To Win

Experienced Divorce and Family Law Attorneys Serving All of Utah

Can I File For Bankruptcy When Getting Divorced?


Divorcing spouses in Utah who are also contemplating filing for bankruptcy should carefully weigh their options to understand how the bankruptcy and divorce might impact each other.

Financial problems are not uncommon for couples in Utah who are experiencing marital troubles. In fact, money may well be a contributor to the eventual end of a marriage. When this happens, one or both of the spouses might actually consider filing for bankruptcy in addition to filing for divorce.

Before making a choice about whether or not to file for bankruptcy or when to file for bankruptcy relative to filing for the divorce, there are several factors that should be reviewed.

Different Bankruptcy Plans For Different Situations

As explained by My Horizon Today, a Chapter 7 bankruptcy and a Chapter 13 bankruptcy operate quite differently. The former may well be more appropriate for persons who have high levels of unsecured debt and who are not in jeopardy of losing assets. A Chapter 13 bankruptcy does not require people to give up their assets so might be a good option for consumers who want to save their homes, for example.

Another important factor to consider is the length of time each bankruptcy plan lasts. A Chapter 7 bankruptcy may be completed in a matter of months, but a Chapter 13 plan lasts for multiple years. By filing for this type of plan prior to filing for divorce, a couple might end up being financially joined for longer than they wish.

Identifying Responsibility For Debts

During the property division negotiations in a divorce, couples not only split their assets but their debts as well. Bankrate cautions people from thinking that they can agree to be responsible for some debts in their divorce decree if they plan to file for bankruptcy later. This is because a divorce decree is a legally binding judgment and any debts assigned to one party in this settlement may not be able to be eliminated via a subsequent bankruptcy.

Homes And Financial Liability

If a divorce decree identifies one party as legally responsible for a marital home but the original joint mortgage remains in place, both parties will still be considered responsible for the debt in the eyes of the lender. For this reason, a person who is willing to let their spouse keep a home should insist that a new mortgage is obtained in that person’s name only.

Spousal Cooperation

For couples that might benefit financially from a joint Chapter 7 bankruptcy prior to their divorce, there is one more factor to consider. The pair must be able to work collaboratively together to complete the bankruptcy. If the relationship is highly adversarial, this may not be feasible.

Legal Consultation Is Important

Because there are many factors to consider when balancing serious debt and divorce, Utah residents are encouraged to consult with an experienced attorney. Getting accurate and complete information can help people to make the right decisions for their situation.