While the reasons for the demise of marriages vary couple to couple, financial problems are one of the leading causes of divorce.

Sometimes, couples are able to repair their financial woes, reducing marital stress and possibly preventing divorce. For example, the American Bankruptcy Institute reports bankruptcy filings have decreased year-to-date 2018 over 2017.

Still, there is plenty of work for bankruptcy attorneys since more than 570,726 people have sought bankruptcy protection thus far in 2018.

If a couple walks into your office seeking legal advice about their financial woes and marital problems, apart from potential conflict of interest issues, would you know how to advise them?

In an effort to answer that question, Progressive Law Practice asked divorce and bankruptcy practitioners for their advice. Each attorney answered the same question:

If a married couple has a mountain of debt and also wants to get divorced, which should they pursue first and why? (responses have been condensed for clarity and brevity).

Bankruptcy Attorneys Speak

Wayne Novick, Dayton, Ohio

"It’s not a ‘yes or no’ question. It’s a ‘chicken before the egg’ question. It also depends on the lawyer the couple went to see. The lawyer must determine if they can represent both people. If the couple can’t be represented by the same lawyer in their domestic relations matter, I don’t see how they can be represented by the same lawyer for a bankruptcy."

"I believe domestic relations lawyers should be working simultaneously with the bankruptcy attorney to create a situation where both matters are handled properly. That is magic and rarely happens."

"Every situation varies. Some people want to get divorced first, debts be damned. One thing is certain: bankruptcy lawyers should be asking couples filing bankruptcy jointly if a divorce is imminent and domestic relations attorneys should be asking if the couple is contemplating a joint bankruptcy."

Michael Daniels, Albuquerque, NM

"Filing a joint bankruptcy before completion of a divorce has the benefits of getting two people a (bankruptcy) discharge for only one fee. It also prevents the divorce from mutating into a bankruptcy battle, because they’re on the same side in the bankruptcy court. There are also means test benefits when the parties live separately, either for joint or individual bankruptcy cases."

 Jed Berliner, Springfield, MA

"Divorce first so one can discharge a property division obligation in a later Chapter 13."

Domestic Relations Lawyers Speak

Gary Gottfried, Columbus, OH

"Generally, I will tell clients to file and complete the bankruptcy proceeding before filing for divorce. That way the bankruptcy frees up cash so there is more to pay towards spousal support (since child support currently is based solely on gross income). However, there are times when I suggest the divorce be filed before the bankruptcy. Examples include if there is a dispute over children’s issues, such as one parent not returning the child, abuse situations or where support of any nature is not being paid. Child and spousal support are not dischargeable in bankruptcy and it is my understanding the automatic stay provisions of the bankruptcy act do not apply to the payment of child support and spousal support."

Allison Williams, Short Hills, NJ

"In New Jersey, a married couple cannot together consult an attorney for a divorce, unless they are both seeking to hire the attorney as a mediator. This is so because we, as attorneys, are to maintain confidences of our client, advising him or her relative to that person’s interests. In divorce, the spouses do not have the same interests, so the advice given to the one is inherently at odds with the advice given to the other."

"Regarding debts, if a person comes in for a divorce consultation and has substantial debt, I immediately refer them to a bankruptcy attorney, if that option is being contemplated. More often than not, the determination of whether to file before or after divorce will depend on the likely allocation of debt in the divorce process. For instance, if one spouse earns a low percentage of the parties’ combined earnings, we may negotiate the lower earner pay a lower percentage of marital debt. In that instance, it may not be advisable to file for bankruptcy because the debt to be discharged post-divorce may be considerably lower than if the party filed pre-divorce." 

"The party contemplating bankruptcy may also not have considered having debt paid in part by an accord and satisfaction--an agreement by the creditor to accept a lower percentage of total debt than is owed and to write off the balance. This discharge of debt usually harms your credit rating, and the debtor is required to pay taxes on the money saved by the discharge of debt.  However, the ramifications of that are often less onerous than the impact of bankruptcy. Ultimately, the advice given and the remedy pursued is fact-specific and requires an understanding of the total debt load, the likely settlement in divorce, the party’s plans for real estate acquisition post-divorce and related financial issues."

Tami Kamin Meyer is an Ohio bankruptcy attorney and freelance writer.