It may seem like a Chapter 13 bankruptcy would go hand-in-hand with divorce proceedings since a permanent separation like this can mean financial hardship for both partners. Besides, since you're already working with an attorney, why not kill two birds with one stone? Lots of couples split up while still having a pile of debts that they don't know how to resolve. Taking Chapter 13 bankruptcy means that you will still be able to pay off your debts over the next two to five years instead of having to face them immediately. Going to bankruptcy court will also allow them to have jurisdiction over financial decisions which are part of your divorce. So, is it a good idea to pursue bankruptcy while you are still in the midst of your divorce?
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The first negative involved with filing bankruptcy during the time when your divorce is still in process is the fact that the courts will issue an automatic stay order. This order puts a hold on all lawsuits involving debtors which includes your divorce action. Because of this, your divorce can be put on hold indefinitely until the bankruptcy court issues another order saying it's okay to proceed. In addition, the bankruptcy court has the power to review and approve (or disapprove) all settlement agreements either spouse makes in divorce court.
Many people believe they won't be allowed to file for Chapter 13 bankruptcy at the same time they are going through their divorce, but there is no law prohibiting it. Of course, this is never going to be the most opportune time to file bankruptcy, not while you've got everything to deal with involving your divorce. Besides, as mentioned above, a bankruptcy can cause your divorce to go into an immediate holding pattern which may stop its completion until the bankruptcy case is resolved.
Once your divorce has been finalized, the payment plan established by the Chapter 13 bankruptcy will remain in effect. Because of this, the divorce settlement must set up guidelines as to how the payments will be made to the plan and who will be responsible for making them. Therefore, just the fact that you declared bankruptcy will add just one more bone of contention to your divorce.
Although you can legally file for Chapter 13 bankruptcy at the same time you are filing for divorce, it will add complications to your life that you may not want to face at the same time. The wise move is to know the implications of filing two concurrent suits before you make any decisions.
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