If you and your spouse have decided to divorce, one of the problems that may have spurred it was debt. Dealing with debt in a marriage can be difficult, especially if your spouse continues to build debt despite you trying to get out of it.
Bankruptcy could help in some cases, but should you opt for bankruptcy before or after you divorce? The decision you make should be based on how the debt is distributed during your divorce and what will remain in your name.
Debt and your Minnesota divorce
Minnesota is an equitable distribution state. That means that your debts should be divided equitably upon divorce. This may work to your benefit if you can show that you’ve been regularly making payments on debt or that your spouse is the one who has been accruing debts that you’ve attempted to pay.
As an example, think about a situation in which you paid off $5,000 in debt with a bonus from your workplace. You cut up your credit card and told your spouse to do the same to avoid accruing more debt. Then, during the divorce, you find out that they had a copy of your card made and used it to make many purchases. In that kind of case, it would be reasonable to ask that you don’t get saddled with that debt. Instead, you may ask that your spouse pays that debt back.
When bankruptcy may be right for you
Bankruptcy could be a good choice if many of the debts are shared and you cannot pay them off before the divorce. Similarly, if those debts will make it hard to move on after the divorce, you may want to think about closing your accounts and entering into bankruptcy prior to filing for divorce.
If you believe that you won’t have many debts after the divorce, or if much of the debt will be paid off by liquidating other assets, you may want to reconsider bankruptcy until after the divorce is finalized. Then, you’ll be better able to see which debts you’ve been left with and if bankruptcy is necessary for you personally.