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Can I file for bankruptcy during a Florida divorce?

On Behalf of | Feb 15, 2024 | Bankruptcy

If you are navigating a divorce in Florida, you may also consider bankruptcy to manage debts. However, it is crucial to understand that this decision will likely impact the property division process, domestic support obligations and it introduces complexities that demand careful consideration.

Property division challenges

In Florida, marital property undergoes equitable distribution during divorce. Under this system, judges aim for a fair split. However, filing for bankruptcy triggers an automatic stay, freezing the property division process until the bankruptcy case concludes. The stay prevents actions against the debtor’s property, applying to both creditors and the divorce court. Consequently, bankruptcy during divorce can significantly prolong the property division process, escalating legal fees for both parties.

Impact on domestic support obligations

Bankruptcy also influences domestic support obligations like alimony and child support. While these obligations are non-dischargeable, their treatment varies with the bankruptcy type.

In Chapter 7 bankruptcy, domestic support obligations hold priority over other unsecured debts. Yet, if available assets fall short, the balance remains due after case closure. In Chapter 13, these obligations must be paid in full through the repayment plan, with no option for reduction without consent or court order. Ongoing payments must be maintained to preserve eligibility for a discharge.

Weighing the decision

The decision to file for bankruptcy during divorce is nuanced. On the advantages side, it can eliminate some or all debts post-divorce. It can provide some protection of assets from creditors and ex-spouse. It halts creditor actions during bankruptcy, and it can streamline financial matters for fair settlement negotiations.

On the other hand, it will prolong the property division and divorce proceedings. This means increased legal fees for both parties. It can cause credit score damage hindering future credit access, and you risk losing nonexempt assets. You also still have the ongoing obligation to non-dischargeable debts after bankruptcy.

Individual circumstances dictate the best course of action. Assess the potential pros and cons and navigate the legal complexities in both bankruptcy and divorce courts.


Kingcade & Garcia | A Miami Law Firm