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Factors to weigh when considering a divorce and a bankruptcy

Kentucky residents with unmanageable financial situations and unfulfilling marriages sometimes consider filing for both bankruptcy and a divorce. While these steps could both lead to a less stressful and happier life, deciding which one to take first is not always easy. Making this choice may be simplified after a number of important factors have been taken into consideration.

Those who earn significant incomes may not qualify for a Chapter 7 bankruptcy due to the means test, and it may be advisable for the spouses of high earners to seek a divorce before filing for bankruptcy. This will mean that only their income will be used to determine whether or not they qualify. Another factor that could make divorce a logical first step is a situation where one spouse has a large amount of property that would not be divided during a divorce. Assets owned prior to a marriage or received as an inheritance or gift during a marriage could become a problem and prevent the bankruptcy from being discharged.

Timing is important when making these decisions, and couples eager to put their marriage behind them may wish to divorce before filing a bankruptcy. This is because assets placed in a bankruptcy estate cannot be divided as part of a divorce settlement unless the bankruptcy has been discharged or a judge can be convinced to make an exemption.

Attorneys with bankruptcy experience will likely address issues such as these during an initial client consultation. During this consultation, attorneys may also explain the difference between the various forms of debt relief available as well as the advantages and disadvantages of each of them. While filing a bankruptcy may not be prudent in every situation, it will usually provide the opportunity for a financial fresh start and put an end to harassment from creditors and debt collectors.

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