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Getting a gray divorce with debt: Should you file for bankruptcy?

On Behalf of | Apr 28, 2021 | divorce

You’re seriously considering divorcing your spouse for one reason only: They cannot keep your accounts balanced. They spend more than you have to use, and your debts keep piling up.

Now that you’re getting closer to retirement, you’ve realized that you can’t continue living this way. You want to separate and move on, but is it worth it? If you do decide to move forward as a single person, how can you avoid being saddled with all of this debt?

Divorce and debt: Talking about bankruptcy

The first thing you should do is take a look at your finances to see exactly how they are. See how much debt you’re in and if you’re in a position to pay it off if you plan to divorce. Paying off your debts prior to divorce may make your split easier, so that you don’t have debt when you’re living on your own.

Alternatively, you may want to talk to your spouse about filing for bankruptcy, so that you can resolve some debts before you bring up divorce. Bankruptcy is also a good way to find out about hidden accounts or debts that your spouse may not have shared with you.

Should you file for bankruptcy before or after divorce?

It depends. If you want to make sure you have no debts following the divorce, completing a bankruptcy first makes more sense. Alternatively, if you don’t have many debts in your name and your attorney believes that you can negotiate out of paying for your spouse’s debts, then you may not want to file for bankruptcy. You may find that divorcing helps you walk away without substantial debt, so that you don’t have to worry about ruining your credit.

No two people are in the same situation with debt, just as no two people will have the same divorce. It’s a good idea to have a chat with your attorney about what they think by taking them your financial documents as well as discussing the reasons you have for wanting to separate from your spouse. They may have a few ideas about how to proceed.