• How does bankruptcy affect your divorce decision?ring image by Jens Klingebiel from Fotolia.com
  
  Bankruptcy and divorce are often interrelated. Bankruptcy laws affect the terms of your divorce, and divorce laws affect the terms of your bankruptcy. The details of this relationship generally depend on whether you file divorce before, during or after you file for bankruptcy. Additionally, the effects of bankruptcy on divorce can vary, depending on whether you file for Chapter 7 or Chapter 13.
  
  

Marital Obligations

• When you file for Chapter 7 bankruptcy, the law will "discharge" almost all of your existing debts and financial obligations. This means you never have to pay those debts back. However, bankruptcy law provides a few exceptions to the discharge, including family support or marital obligations. You cannot, for example, discharge your obligation to pay monthly child support. Neither can you discharge your obligation to pay alimony. Bankruptcy simply does not provide relief from post-divorce family support obligations.
  
  

Joint Obligations

• Bankruptcy does not relieve you from other divorce-related obligations. For example, let's say you and your spouse co-sign on a credit card and then run up a $10,000 balance. You then get a divorce, and you are liable under the divorce decree for half of the credit card debt ($5,000). You then file for Chapter 7 bankruptcy, which means your obligation to the credit card company is discharged. You no longer owe the credit card company $5,000. But you do owe your spouse that $5,000 under the divorce decree. So, if the credit card company gets repayment of the full $10,000 balance, your former spouse could sue you to recover your half ($5,000).
  
  

Joint Filing

• If you and your spouse jointly file for Chapter 7 bankruptcy, then during the procedure you decide to divorce, you can simply continue with the Chapter 7 procedure. Your Chapter 7 case will end long before your divorce becomes final. But if you and your spouse jointly file for Chapter 13, and then you get divorced, you will have to re-file for Chapter 13 bankruptcy on your own. To jointly file for bankruptcy, you must be a married couple; so if you divorce, the law requires the bankruptcy court to dismiss your Chapter 13 petition.