Often divorce and bankruptcy are intertwined. Nearly 22% of marriages that ended in divorce, reported that money issues were the main reason for their divorce.

If you and your spouse are struggling financially and are considering both bankruptcy and divorce, you may want to know what steps you should take. Can you file for both at the same time? Which one should you do first?

Do not file for divorce and bankruptcy at the same time

If your filing for bankruptcy and divorce overlap, you may create more issues and elongate both processes. Upon filing for either Chapter 7 or Chapter 13 bankruptcy, your property and assets will be put on an automatic stay that freezes both. Your property and assets will stay frozen until the bankruptcy process is completed. Since divorce requires an assessment and division of assets, your divorce cannot be finalized until your bankruptcy is completed.

Which one should you file for first?

Now that you know not to file for both divorce and bankruptcy at the same time, you may be wondering which one you should do first. Choosing to file for bankruptcy or divorce first, may depend on your situation. There are benefits to both.

Divorce first benefits

Filing for divorce first may be better if you and your spouse both have high incomes. Chapter 7 is often the better bankruptcy option because it is quicker than Chapter 13 and eliminates all debt. In order to qualify for Chapter 7, your income must be below the Tennessee median income.

If you and your spouse’s combined income is too high to qualify for Chapter 7, you may want to divorce first and file for bankruptcy on your own if your income is low enough to qualify.

Bankruptcy first benefits

Filing for bankruptcy before divorce may save you money. If you and your spouse can get along and are willing to go through the bankruptcy process together, filing for bankruptcy before divorce may be the better option.

This may allow both of you to share the cost of your attorney and filing fees. It may also simplify the divorce process because it often divides assets. Finally, filing jointly before your divorce may protect more of your property.

Not all debts are included in bankruptcy

Although Chapter 7 eliminates all debt whereas Chapter 13 sets up a repayment plan, it is important to note that not all debts are dischargeable. Some common debts that are not forgiven by filing for bankruptcy include alimony and child support payments, student loans or fines owed to government agencies. This means that no matter which type of bankruptcy you file for, you are still responsible for repaying those debts.