For most people, divorce represents a messy collection of marital problems and life transitions encapsulated in that one word. Bankruptcy, on the other hand, speaks to financial distress that may affect an individual or a couple for a variety of reasons.
When both divorce and bankruptcy become inevitable, it is easy to feel overwhelmed. Sorting out the issues and realizing that a better tomorrow is achievable can bring the clarity and resolve that is badly needed at such a time.
Examining The Aspects Of Divorce: Interpersonal And Financial
The emotional divorce, the social parting of ways and the restructuring of a family are all difficult for many people to navigate.
The monetary aspects of a divorce, on the other hand, culminate in a settling of accounts, including the following:
- Property division, including allocation of bank accounts, investments, retirement accounts, the marital home, other real estate, collectibles, recreational assets and pets
- Division of debts
- Spousal support before and/or after the divorce, when appropriate
- Child support when the divorcing couple share mutual minor children
Financially speaking, divorce ends up resembling the dissolution of a business, involving creditors and other entities outside the marriage.
Understanding Common Triggers For Bankruptcy
Bankruptcy, on the other hand, represents the accumulation of unmanageable debts. These debts may have come about over time or suddenly. Many couples find themselves mired in a swamp of credit card accounts, late utility bills and other loans that they have lost track of and can no longer keep up with. Others reach the precipice of bankruptcy because of catastrophic financial events such as a business’s failure or forced shut-down, home repairs, natural disasters or medical crises. A bout with cancer, paralysis or COVID-19 can leave family finances out of control.
The financial realities of divorce can compound money troubles overall. Bankruptcy may bring debt relief.
As the poet wrote, “Two roads diverged in a wood, and I— I took the one less traveled by, And that has made all the difference.” Will you be able to say the same?
When two people find themselves approaching divorce and bankruptcy around the same time, questions and worries seem to multiply: Which should come first: the bankruptcy or the divorce? What are the best ways to structure both, ideally allowing each divorced individual a chance to rebuild a financially sustainable life?
Professional advice about both bankruptcy and divorce, along with self-reflection, can bring answers customized to individual circumstances.
