You and your spouse have always argued over money, but the problem has reached a point where you no longer want to be together. Now that you’re divorcing, one of your questions is if you should handle the debt before or after you divorce.
There are two scenarios that you may run into. First, you have to think about how much debt belongs to you and how much belongs to your spouse. Arkansas is an equitable distribution state, so you should keep in mind that your debts should be divided fairly, not necessarily equally. So, if your spouse ran up the debts, the court may agree that they should pay them off.
The second consideration is when the debt was created. Debts created during your marriage may be marital debts and subject to division, whereas debts from before your marriage will be separate debts.
Once you know what kind of debt you have, you can decide if you want to opt for bankruptcy before or after you divorce.
When should you opt for bankruptcy before divorcing?
If these are shared debts and you’re likely to leave the marriage with significant debt, you and your spouse may agree to go through bankruptcy together first. Doing this will reduce the debt load and help eliminate you from having debts other than those that are reaffirmed as you move forward.
When should you choose bankruptcy after divorce?
In the case that you and your spouse won’t have an even amount of debt, you may not want to go through bankruptcy before divorce. For example, if you won’t take on any debt when you leave the marriage, you can protect your credit score and history by avoiding bankruptcy and allowing your ex-spouse to go into bankruptcy after divorce on their own if they wish.
It’s up to you to decide if bankruptcy is right for your situation. You may want to look into getting legal support to determine how your marital property could be divided and if a bankruptcy will be necessary to work out your debts and move forward as a single person.