Divorce can be emotionally draining, but when combined with financial strain or bankruptcy, the process becomes even more complicated. Many families in Washington find themselves facing both challenges at once—sorting through not only personal relationships but also debts, assets, and financial recovery.
At Story Law in Bellevue, our family law attorneys understand how bankruptcy can affect divorce proceedings and what steps you can take to protect your financial stability. With decades of experience guiding clients through both family and financial transitions, we approach every case with care, strategy, and clarity.
Understanding the Connection Between Bankruptcy and Divorce
Bankruptcy and divorce often go hand in hand because both can stem from financial hardship. Divorce can create financial stress that leads to bankruptcy, while bankruptcy can delay or reshape divorce proceedings.
The key is understanding how each process impacts the other—and how to plan accordingly.
In general, bankruptcy aims to relieve individuals or couples from unmanageable debt, while divorce divides marital property and responsibilities. When these two legal processes overlap, they can directly influence what assets are divided, what debts are shared, and how long the divorce takes to finalize.
Types of Bankruptcy Commonly Filed During Divorce
There are two main types of personal bankruptcy most relevant to divorcing couples:
Chapter 7 Bankruptcy
Often called “liquidation bankruptcy,” Chapter 7 involves selling non-exempt assets to pay creditors. It can eliminate most unsecured debts, such as credit cards or medical bills, within a few months.
However, Chapter 7 does not remove obligations like child support, spousal maintenance, or certain taxes. Because it’s a quicker process, many couples choose to complete Chapter 7 before filing for divorce to simplify asset division.
Chapter 13 Bankruptcy
This form of bankruptcy involves creating a repayment plan lasting three to five years. It allows individuals to retain more property while repaying a portion of their debt over time.
If you or your spouse file Chapter 13 during a divorce, the case may remain open for years, which can complicate property division and financial agreements.
Should You File Bankruptcy Before or After Divorce?
Timing is critical when bankruptcy and divorce intersect. There is no one-size-fits-all answer—it depends on the couple’s debt level, income, and goals.
Here’s a general overview:
- Filing Bankruptcy Before Divorce:
This can simplify the divorce by eliminating joint debts and reducing conflict over liability. It’s often beneficial for couples who can still work together financially for a short time. - Filing Divorce Before Bankruptcy:
If your combined income is too high to qualify for Chapter 7 bankruptcy, filing for divorce first may make each person’s individual income low enough to qualify separately. - Filing During Divorce:
This approach can create complications, as both courts (family and bankruptcy) may have overlapping authority over certain assets.
Before making this decision, consulting with both a divorce lawyer and a bankruptcy attorney is crucial. The timing can significantly affect how your assets and debts are divided.
How Bankruptcy Affects Marital Assets and Debts
One of the biggest challenges in managing bankruptcy during divorce is determining how property and debts are treated. Washington is a community property state, which means most assets and debts acquired during the marriage belong to both spouses.
When bankruptcy is filed:
- Community property may be used to pay creditors.
- Individual property may be protected depending on exemptions.
- Joint debts may be discharged for both spouses if they file together.
If only one spouse files for bankruptcy, creditors can still pursue the non-filing spouse for shared debts. That’s why legal coordination between both sides is essential.
At Story Law, we carefully review your financial disclosures, property records, and debt obligations to determine how bankruptcy could affect your divorce settlement.
Bankruptcy and Support Obligations
Bankruptcy can help eliminate certain debts, but it does not erase obligations like child support or spousal maintenance. These payments are considered priority debts and remain enforceable even after bankruptcy.
If you owe support or expect to receive it, bankruptcy may still impact how payments are structured. For example, if your spouse files bankruptcy, some assets that could have supported child or spousal payments might be liquidated, changing the overall financial picture.
Our attorneys help clients ensure that support arrangements are protected even when bankruptcy is involved.
Impact on Divorce Litigation
Bankruptcy can temporarily halt parts of a divorce case through what’s called an automatic stay. When a bankruptcy is filed, creditors and other legal actions must pause while the bankruptcy court reviews the financial situation.
This stay can delay certain aspects of divorce litigation, especially when property division overlaps with bankruptcy proceedings. However, family law issues like custody, parenting plans, and child support can continue, as they are not part of the bankruptcy process.
An experienced divorce lawyer can help coordinate between courts to ensure progress continues wherever possible.
Collaborative Law: A Healthier Approach to Complex Financial Divorces
Not every divorce involving bankruptcy has to be a battle. In fact, collaborative law offers couples a constructive way to address shared financial challenges without escalating conflict.
Through collaborative family law, both spouses—and their attorneys—work together outside of court to reach solutions that honor fairness, financial reality, and the well-being of any children involved.
At Story Law, we often guide clients through collaborative processes to reduce stress and preserve resources. It’s a thoughtful alternative to traditional litigation, especially when financial strain is already high.
When Litigation May Be Necessary
While collaboration is ideal, sometimes bankruptcy and divorce lead to disputes that must be resolved in court. Litigation may be necessary if there are disagreements over hidden assets, debt responsibility, or violations of a divorce decree.
When that happens, you need a legal team that combines deep knowledge of family law and financial litigation. Story Law provides both—protecting your rights while seeking practical, lasting resolutions.
Protecting Your Financial Future
If you’re facing both divorce and bankruptcy, the most important step you can take is to plan strategically. Protecting your future means understanding how every decision—from when you file to how you divide property—affects your financial well-being.
Our attorneys at Story Law work closely with clients to:
- Evaluate the timing of filings for maximum benefit.
- Identify exempt property and protect essential assets.
- Coordinate between bankruptcy and family courts.
- Safeguard support arrangements and parenting plans.
- Reduce emotional and financial stress through practical guidance.
How Story Law Can Help
At Story Law in Bellevue, we understand that financial hardship doesn’t define you—it’s simply one part of your story. Our team combines compassion with decades of experience in family law, bankruptcy-related divorce, and litigation to guide clients toward stability and peace of mind.
We believe in empowering our clients through information, collaboration, and advocacy. Whether you need advice about bankruptcy before divorce, help dividing assets and debts, or representation in court, we’re here to help.
Every family’s financial situation is different. We’ll take the time to listen, explain your options, and develop a clear path forward that supports your goals.
Moving Forward With Confidence
Facing both divorce and bankruptcy can feel overwhelming—but with the right legal support, you can move forward with clarity and control.
At Story Law, we help clients throughout Bellevue, Kirkland, Redmond, and Seattle manage complex financial divorces with respect, transparency, and care. You don’t have to navigate this alone.
If you’re worried about how bankruptcy may affect your divorce process, speak with a family law attorney who understands both sides of the equation.
