Divorce and Bankruptcy: What You Need to Know

by WomansDivorce Staff, updated by Tracy Achen November 11, 2025 

It's an unfortunate fact that divorce and bankruptcy seem to go hand-in-hand. For some people, there's the financial strain of overwhelming debt that leads to the breakdown of their marriage. And others struggle to get by after their divorce, especially if they make much less money than their ex and are saddled with lingering marital debts.

If you're facing divorce and bankruptcy is something you're considering, there are some things you need to be aware before proceeding. In this article, you'll find out why the two often occur in tandem, the potential impact of bankruptcy on your divorce and finances, and whether you should file for bankruptcy before or after your divorce. 

In This Article: 

• Divorce and bankruptcy statistics 
• Should you file for bankruptcy before or after divorce? 
• How the automatic stay impacts divorce proceeding 
• Types of bankruptcy: Chapter 7 vs. Chapter 13 
• How bankruptcy affects alimony and support 

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Divorce and bankruptcy statistics

It's no secret that divorce is an overwhelming stressful event in most people's lives. Besides the legal costs of getting divorced, each spouse's expenses generally take a bigger percentage of their income because they are no longer sharing expenses. And, if one spouse has to find a new job, child care costs may also be added to the list of expenses needing to be paid.

• Statistics on bankruptcy show that 78% of the people filing for bankruptcy said a decline in their income was the main reason, while roughly two-thirds of the people do so because of medical hardships (1). Other reasons include overwhelming debt, excessive spending, and job loss. Unfortunately, getting divorce is also cited as a reason because it has such a huge impact of income and expenses. 
  
  
• Divorce impacts the financial stability of both spouses. For example, a woman's household income drops by 41 percent when she gets divorced, which is almost twice the drop experienced by men (2). Additionally, spouses remain financially liable for joint debts, even if their ex was ordered to pay the debt. 
  
  
• Many divorces today include orders for alimony or child support. For people struggling to get by on one income, their paycheck just won't stretch far enough to meet these obligations and still be able to pay the other bills. 

Should you file for bankruptcy before or after divorce?

When people facing extreme financial issues consider getting divorced, they also need to think about the possibility of bankruptcy and when it should be filed. Depending on individual circumstances, bankruptcy may be better either before or after divorce.

For example, if the combined income for you and your spouse is below the income limit for filing Chapter 7, it's probably best to file for bankruptcy before filing for a divorce. 

If the combined income for you and your spouse exceeds the limits for filing Chapter 7, it's a good idea to wait to file for bankruptcy until after your divorce. Then the bankruptcy filing will be based on your income alone.

If you are contemplating bankruptcy and haven't yet filed for a divorce, you should consider consulting with a bankruptcy lawyer before dissolving your marriage to find out the best way to proceed. 

Benefits of filing for bankruptcy before divorce

A lot of married couples face overwhelming debt without any way to pay off all those debts in the foreseeable future. Combine that with the fact that household income usually decreases due to divorce, and you have a recipe for financial disaster.

If this describes your situation, you might want to think about jointly filing for bankruptcy with your spouse, especially if the majority of the debts are in both your names.

If you jointly file for bankruptcy before your divorce, you'll be able to avoid many of the headaches involved in negotiating the division of assets and debts, because most of this will have been settled by the bankruptcy proceedings. Also, a couple can save a significant amount of money in legal fees if both spouses file for bankruptcy together, as opposed to filing separately after divorce.

To qualify for Chapter 7 bankruptcy, you must pass a means test, which compares your average household monthly income over the past six months to the median income for your state and household size. If your household income exceeds the limits, you'll need to consider other options, such as filing for bankruptcy individually after your divorce. 

Bankruptcy after divorce

It's important to note that a joint bankruptcy filing is not available to divorced couples, even if much of their debts are held jointly.

If you aren't able to qualify for bankruptcy before your divorce, it may be a possibility afterwards due to your decreased income. And filing individually will allow you to manage your own debt separately. But it's important to note that both spouses are held responsible for the repayment of joint debts, regardless of how the debts are divided in their divorce agreement. This is because creditors are not bound by a divorce agreement.

Because a spouse can be held responsible for debts which were assigned to the other spouse in a divorce, it's important to contact your ex-spouse if you're considering filing for bankruptcy. 

How the automatic stay impacts divorce proceeding

When you file for bankruptcy, an "automatic stay" is initiated that stops most legal actions involving your debts and property. This includes divorce proceeding, because all the marital assets will be included in the bankruptcy estate. This also means these assets can't be divided in a divorce until the bankruptcy is concluded.

If you file for bankruptcy case during your divorce, you must notify the court that you have filed. Most divorce proceedings will be stopped until the stay is lifted. The automatic stay makes exceptions for essential family obligations. Issues relating to child custody, child support, and alimony can still be addressed by the family court despite the bankruptcy filing.

The automatic stay will remain in effect until the bankruptcy case is closed, dismissed, or the debtor is granted a discharge. How long long this takes will depend on the type of bankruptcy filed. A Chapter 7 filing may only briefly pause the division of property, while the repayment plan of a Chapter 13 filing could extend the automatic stay for much longer. 

Types of bankruptcy: Chapter 7 vs. Chapter 13

There are two types of bankruptcy that can be filed for by most individuals:

• Chapter 7 Bankruptcy (liquidation): This type of personal bankruptcy offers petitioners a complete discharge of many unsecured debts (debts not attached to any property). This includes credit card balances, medical bills, personal loans, and payday loans. Most Chapter 7 bankruptcy cases generally take 4 to 6 months to resolve. 
  
  
• Chapter 13 Bankruptcy (reorganization): This type of personal bankruptcy allows the petitioner a period of three to five years to get current on their past-due debts by making regular payments in a repayment plan. It tends to work best for people that have a dependable income source and/or significant non-exempt assets or property they want to hold on to.

Keep in mind that how the debts are designated by the divorce court may not hold up in a bankruptcy court. For example, if a spouse is assigned a joint debt in the divorce and then files for Chapter 7 bankruptcy, the creditors can still come after the other spouse for repayment. 

How bankruptcy affects alimony and child support?

Bankruptcy does not eliminate alimony or child support obligations because these are considered non-dischargeable debts. Even if someone files for bankruptcy, they are still required to pay any ongoing support and any past-due support that has accumulated.

Additional types of debts which are not dischargeable in bankruptcy proceedings include:

• student loans 
• most tax debts 
• debts incurred by fraud or criminal acts 
• court-ordered fines and restitution

So, if you're struggling to make child support or alimony payments, you'll need to have your support orders modified by the family court, not the bankruptcy court. Even though the types of debts listed above are not dischargeable, bankruptcy can still offer you financial relief by excusing you from other debts.

Having a skilled attorney who is knowledgeable in both family law and bankruptcy is crucial when you're facing the prospect of both. They can help you understand and navigate the complexities of the legal process and determine if it would be best to file for bankruptcy before or after your divorce.