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Dealing with debt and divorce

Georgia residents who are going through a divorce will have a lot of choices to make that are likely to have a large impact on their finances and future. This is especially true if they are struggling with debt, and deciding whether to file for divorce or bankruptcy first can be a tough choice. Generally speaking, it is better for those ending their marriage to eliminate as much debt as possible first because of the way that asset division works.

When a couple gets a divorce, they will often end up splitting both their property and their debts. If someone has a large amount of debt, it may work against them being able to receive a fair portion marital assets. By filing for bankruptcy before going through with a divorce, people will not have to worry about their debt working against them.

Another reason that someone may want to file for bankruptcy first is because if their spouse also has debt, they may end up being required to pay off some of their ex's loans. However, filing for bankruptcy will not eliminate this debt unless someone's name is on the account that is being paid off. This means that someone who ends up responsible for part of their ex's loans and files for bankruptcy will still be legally obligated to pay off debt that is not in their name.

Understanding how asset division works can help people ensure they have a better chance of an equitable portion of marital property. Each state has different laws for this process, and a lawyer could help someone understand what is involved and what to expect. Additionally, a lawyer could also argue on an individual's behalf in court.

Source: Fox Business, "Which Should I File First: Divorce or Bankruptcy?", Justin Harelik, July 10, 2013