Is it Legal to File Bankruptcy Before Filing for Divorce?
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It is absolutely legal and many times cleaner to file a bankruptcy prior to engaging in divorce proceedings, especially in California. Since California is a community property state, all property belonging to either spouse which is not very clearly “separate property” becomes property of the bankruptcy estate upon the filing of a bankruptcy petition regardless of whether only one spouse files or a joint petition is filed. Often times, couples who are on the verge of a divorce or in the midst of divorce/dissolution proceedings believe that a solo bankruptcy filing has no impact on the non-filing spouse. Therefore, they do not advise the non-filing spouse of the decision to file bankruptcy and this can cause havoc with respect to community assets as well as the dissolution proceedings.
If you or your estranged spouse are considering filing bankruptcy, you need to keep the other spouse in the loop. You also need a competent bankruptcy attorney to guide your bankruptcy case. Do not rely on your family law attorney to advise you as to the impact of a bankruptcy filing. While many family law attorneys have a simple understanding of bankruptcy law, there are a small few who have the depth of understanding necessary to successfully navigate the bankruptcy code to insure you achieve a successful result in both forums.