You’d have the same amount of debt after a divorce as you would have before, because if it’s just your debt or joint debt, you’ll still be listing it in your bankruptcy. The main issue in deciding which action to take, whether you get divorced first or file for bankruptcy, would be the income. Sometimes, when you have are now down to a one income household, it will allow you to file a Chapter 7 Bankruptcy. In fact, there is a question that addresses that in the income limitations section on the bankruptcy petition. They want to ensure you are divorcing for reasons other than avoiding what they call the “Means Test.”

You certainly don’t want to get separated solely for the purpose of filing a Chapter 7 but if you’re in the process of separating, you might want to talk to an attorney first to figure out the best timing for getting  filing a bankruptcy.

When you’re filling out your bankruptcy petition, there is a box that you’ll have to check, you declare on the penalty of perjury that you and your spouse are legally separated under non-bankruptcy law and that you and your spouse are living apart for reasons that do not include evading the “Means Test” requirements.

Basically, they don’t want people getting divorced or separated just so they can file a Chapter 7 and avoid the income limitations. You will have to check that box and state under penalty of perjury that you’re doing it for reasons other than to avoid the bankruptcy “Means Test”.