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When should you file for bankruptcy during divorce?

Financial difficulties may certainly end up taking a toll on a marriage. If you and/or your spouse’s money troubles has compelled either of you to seek a divorce, then you could end up facing two potentially life-altering decisions: ending your marriage and filing for bankruptcy protection. If you happen to be seeking debt relief through bankruptcy at the same time that you are initiating divorce proceedings, then the question as to whether it is wiser to file bankruptcy before or after your divorce is finalized may arise.

According to Chapter 458 Section 16 of New Hampshire state law, the court will typically call for the equitable division of property during divorce proceedings. That equitable treatment may also extend to any debts you and your soon-to-be ex-spouse may share. While the law does state that the court may consider certain factors such as your income, age, and ability to find work when assigning ownership of your marital assets and liabilities, it may be very likely that debts may also be divided equally between you.

How does equitable division apply to bankruptcy? If your spouse chose to file for bankruptcy after your divorce, then the marital debts that he or she was assigned ownership of may end being discharged. Creditors could then potentially come after you if that debt was shared.

Your best course of action may be to file bankruptcy jointly with your spouse prior to your divorce being finalized. That will allow you both to discharge debts before they can be divided as part of your divorce settlement. While such a suggestion should not be taken as legal advice, it may provide you with the debt relief you have been desperately seeking.  

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