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Louisville Bankruptcy Filings Frequently Stem From Divorce

Divorce can take a financial and emotional toll.
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Our Louisville bankruptcy attorneys have encountered many clients who have recently emerged from a tumultuous separation. Having dealt with this issue on the back end, we hope to offer some insight as to how you might head off some of the major problems before you find yourself deeply in debt.

Perhaps the most common mistake that we see is the lack of financial organization and planning prior to filing for divorce. Filing for bankruptcy before a divorce can often make the most sense — but is not an option in many cases for a variety of reasons. Filing as a newly single individual can still make sense when it comes to seeking a fresh start. Too often, divorcees find the financial strain of starting a second household is too much to bear while dealing with the leftover debts of a broken marriage.


Understanding your financial situation is critical. If you can have most of your financial documents in order and ready, it may make the process go much more smoothly and ultimately be more cost effective because it cuts down on the time the attorney must do “discovery” work. That’s not to say you don’t want your lawyer to thoroughly comb through everything, but ask prior to that first meeting what kinds of documents and records your lawyer might be expecting to see.

Understand that all divorce courts are going to demand to see some type of financial affidavit that outlines your earnings, your living expenses, your assets and your liabilities. Different states have different disclosure requirements, but generally speaking, you’re going to want to gather things like:

  • Your federal state and personal property tax returns from the last three years or more;
  • Your forms W-2, 1099 and K-1 from the last year or more;
  • Three months worth of recent pay stubs, if you have them (from both parties, if that’s feasible);
  • Any loan applications, deeds and lease agreements;
  • All bank account statements, including personal and joint checking, savings and credit card accounts;
  • Retirement plan details;
  • Life insurance details.

The other thing you might consider, if at all possible, is “playing nice” with your ex. That doesn’t mean you have to concede to every demand. However, you may want to consider compromising on certain issues so that you can keep the process uncontested. The cost differential between a contested divorce and an uncontested divorce can be many thousands of dollars in legal fees. You may find that certain assets are worth the fight, but carefully weigh all your options before going that route.

You’re also going to want to make sure early on in the process that you check your credit report. You want to know whether your spouse has missed any payments on anything, particularly on any jointly-held accounts. Perhaps it’s a miscommunication, but either way, the last thing you need is for your credit to take a hit.

Perhaps like many couples, you found money to the be the source of contention that led or at least contributed to the unraveling of your union. You need to know whether your soon-to-be-ex is considering filing bankruptcy at any point in the near future. This could have a major effect on you, particularly if you held a number of joint accounts and assets.

If you were both deeply in debt. it may be worth it to consider filing for a joint bankruptcy prior to proceeding with the divorce. Keep in mind that if your spouse files and you don’t, you may be left on the hook for 100 percent of that debt, while your ex is free and clear.

Just make sure you carefully weigh all your options before you proceed.

If you need to speak to a Kentucky bankruptcy attorney or Louisville foreclosure defense firm, contact the Schwartz Bankruptcy Law Center at 866-270-4495 for a free and confidential consultation to discuss your rights.

Additional Resources:
Preparing your finances for divorce, Aug. 26, 2013, By Daniel Bortz, U.S. News & World Report
More Blog Entries:
Financial Health Weighs on Prospective Mates, Study Says, Aug. 15, 2013, Louisville Chapter 7 Bankruptcy Lawyer Blog

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