There are special considerations if you filed bankruptcy before your divorce and now need to think about filing another one.
Divorce usually results in a major financial hit no matter how well or badly you fared in the divorce decree. Even if you and your ex-spouse filed bankruptcy sometime before the divorce—to deal with the fallout from the Great Recession, for example—you may need to be seriously considering bankruptcy again after the divorce.
There are some relatively clear rules about when you can file a bankruptcy after doing one earlier. In this blog we’ll cover those rules briefly, and make clear that they apply the same regardless of an intervening divorce, and then touch on some special considerations that apply to the post-divorce situation.
No Special Break for Post-Divorce Bankruptcies
First let’s make clear: the rules about when you can file a new bankruptcy case are not affected by your intervening divorce. The timing of a second bankruptcy case turns simply on what kind of case—Chapter 7, 11, 12, or 13—you were involved in earlier, and what kind of case you intend to file now. Your marital status—before, during, after—is irrelevant.
The Timing Rules
If you now, after the divorce, want to file a Chapter 7 “straight bankruptcy” case—
- You need to wait 8 years from the filing date of the earlier case to the filing date of the new case, if the earlier one was a Chapter 7 case (or a Chapter 11 one).
- You need to wait 6 years from the filing date of the earlier case to the filing date of the new case, if the earlier one was a Chapter 13 case. (You don’t have to wait any time at all in the highly unusual situation that in this earlier Chapter 13 case you paid 100% of the allowed debts, or paid at least 70% and met some other conditions.)
If you now, after the divorce, want to file a Chapter 13 “adjustment of debts” case–
- You need to wait 4 years from the filing date of the earlier case to the filing date of the new case, if the earlier one was a Chapter 7 case (or a Chapter 11 or 12 one).
- You need to wait 2 years from the filing date of the earlier case to the filing date of the new case, if the earlier one was a Chapter 13 case.
Special Post-Divorce Considerations
But there are some important considerations that apply especially strongly to the post-divorce situation, as presented in the form of the following three questions:
- Were YOU definitely a debtor in the earlier case? The timing rules only apply to you if you were formally a debtor in that prior case. So if your ex-spouse filed that case without you, you can file your new bankruptcy whenever you want, no matter when that earlier case was filed.
- Was a “discharge” granted in that earlier bankruptcy case? The timing rules only apply to you (as well as to your ex-spouse) if that earlier case was actually completed successfully and resulted in the bankruptcy court granting a discharge of your debts. You may think that a discharge was entered and be mistaken. If there wasn’t a discharge, you can file your new bankruptcy whenever you want.
- Do you definitely need a “discharge” in a new bankruptcy case? Sometimes the most important benefit of filing a Chapter 13 case is not the discharge of debts but rather the extended protection you get from special secured and “priority” debts such as your home mortgage(s), property and income taxes, child and spousal support obligations, home owner association dues, and student loans. You can get years of protection and the opportunity to pay these kinds of debts based on your ability to pay, by filing a Chapter 13 case whenever you want, no matter when an earlier case was filed.
The next blog will expand on these three important post-divorce considerations.