Law Office of Matthew C. Swanson, P.C.


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Top Four Reasons to File Bankruptcy Prior to Divorce

1. Cost
• Legal fees and filing fees are the same cost when you file a case individually or jointly with your soon-to-be ex.
• Legal fees for divorce are likely to be lower when allocation of debts does not need to be addressed by both parties.

2. Asset Retention
• All bankruptcy filers protect their real and personal property with bankruptcy exemptions. Bankruptcy exemptions determine what property you get to keep, whether it be your home, car, pension, personal belongings, or other property. If property is exempt, you may keep it during and after bankruptcy.
• In Massachusetts, joint filers are allowed to double many of the personal property exemptions. For example, the automobile exemption for a single filer is $7,500 and $15,000 for joint filers. If a couple jointly owns a car worth $15,000, they would likely lose the car in an individual bankruptcy filing after divorce vs. keeping the car in a pre-divorce, joint filing.

3. Chapter 7 Eligibility
• One major factor in determining eligibility for different chapters of bankruptcy is household size. If one spouse makes significantly more than the other spouse, there is a chance that they will not be eligible to file a chapter 7 bankruptcy after the divorce has been finalized.
• For example, if wife makes $65,000 a year and her husband does not work they would most likely be eligible to file a chapter 7 bankruptcy prior to the divorce. If the wife tries to file an individual chapter 7 bankruptcy after the divorce, she would likely be ineligible and better suited for a chapter 13 bankruptcy.

4. Severing Ties to Joint Debt
• Most married couples hold a number of debts jointly. Whether it is a mortgage, car loan, or credit card debt, each party is equally responsible for the entire debt. Assigning joint or individual debts in a divorce does not change the way the creditor views the obligation.
• For example, a divorce decree may stipulate that one party is responsible for all joint and individual debt. The creditor, however, will not treat the debt differently. If payments are not paid or late, this will have a negative impact on your credit. You may be able to pursue your ex in court for contempt, but this will require additional legal fees.

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Matt was always there with any question I had and gave me an answer right away. When we had to meet he was very willing to go by my schedule. Helped me out of a tough spot and I'll be forever thankful to him for that. I would seek Matt out again if I ever need any more legal advice or help.


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