What You Need To Know About Chapter 13 and Divorce

Chapter 13 Bankruptcy and Divorce: Key Takeaways

Divorce and debt often go hand in hand. For many people, Chapter 13 bankruptcy becomes part of the conversation during or after a separation. But the timing of your bankruptcy filing can make a big difference.

Whether you’re thinking about filing before, during, or after your divorce, it’s important to understand how Chapter 13 works and how it could affect your situation. Here are some key considerations:

• Chapter 13 bankruptcy can help you catch up on secured debts like a mortgage or car loan, keep your property, and repay what you owe over 3–5 years.

  • It also offers options for dealing with joint debts, lease obligations, and certain types of divorce-related debts.

• Filing Chapter 13 before your divorce is final can create complications.

  • You and your spouse would have to stay legally and financially connected for years, which can make both the divorce and the bankruptcy harder and more expensive to manage.

• Filing during a pending divorce can stall the divorce case due to the bankruptcy’s automatic stay.

  • It also limits what the divorce court can do, though child support and alimony orders can still be enforced.

• Filing jointly with your spouse is possible even during divorce, but it only works if you have a strong working relationship. You’d need to stick to the repayment plan together, which could last up to five years.

• Filing Chapter 13 without your spouse before the divorce is final is rarely helpful.

  • You’d still have to include their income and expenses in your case, and you wouldn’t get the full benefit of a solo filing.

• Filing Chapter 13 after your divorce is final is often the simplest and most effective option.

  • You won’t have to coordinate with your ex, and you’ll know exactly what assets and debts you’re responsible for. You may even be able to deal with certain divorce-related debts, like property settlement payments, that wouldn’t be dischargeable in Chapter 7.

• Chapter 13 isn’t the same as Chapter 7. If you’re mainly dealing with unsecured debts like credit cards or medical bills and you qualify based on your income, Chapter 7 might be a faster, simpler solution.

If you're considering bankruptcy during or after divorce, timing matters. Many people choose to speak with a bankruptcy attorney to understand their options before making a decision. Upsolve can connect you with a local attorney for a free consultation.

Should You File Chapter 13 Bankruptcy Before You File for Divorce?

If you’re on the brink of divorce, it's often a bad idea to file Chapter 13 bankruptcy because of the required 3-5 year repayment plan.

This is why it's also not usually a good idea to file for divorce during an ongoing Chapter 13 case.

If you file Chapter 13 bankruptcy while your divorce is pending, the automatic stay will stop the divorce proceedings for the next 3–5 years.

It can also cause problems for your bankruptcy and your divorce case:

• On the divorce side, the pending bankruptcy will limit what the divorce court can do and your divorce will move more slowly and be more expensive.

• On the bankruptcy side, if you and your spouse filed jointly, one or both of you will need a new bankruptcy attorney. Once the divorce is filed, the two of you no longer have shared financial interests, and conflict of interest rules prevent the same bankruptcy lawyer from representing two clients with conflicting interests.

A joint Chapter 13 case can be divided into two separate cases, but the process is a lot of work, requires additional fees, and usually results in at least one of the separate bankruptcies getting dismissed. 

Note that the automatic stay won’t stop the divorce court from entering or enforcing child support or spousal support orders while the bankruptcy is active. 

Should You File Chapter 13 Jointly With Your Spouse?

You’re still legally married until your divorce is finalized, even if the process is already underway. That means you can file a joint Chapter 13 bankruptcy. But just because it’s an option doesn’t mean it’s the right fit for every couple.

A joint Chapter 13 case requires a high level of cooperation, often for 3 to 5 years. If you and your spouse can work well together during that time, it might offer some real benefits.

One of the biggest advantages is that Chapter 13 can help deal with joint marital debts. If you both want to walk away from property like a house or car, bankruptcy might make that easier. For example, you may be able to surrender the property and move on without having to sell it or figure out who gets it in the divorce. Getting your debts under control through bankruptcy could also simplify your divorce and reduce legal costs.

You can also include things like alimony or child support payments in your Chapter 13 repayment plan. This helps ensure those payments are made on time. Joint filers don’t have to split the payments 50/50 — you can divide them however works best for your situation.

But a joint Chapter 13 also comes with some challenges. While the case is open, you usually can’t take on new debt or sell property without court approval. That can be tricky if you’ve already separated and are trying to move forward independently. Also, if one spouse stops making the agreed-upon payments, it could put the whole case at risk of being dismissed.

Should You File Chapter 13 Without Your Spouse?

Filing a joint Chapter 13 while going through a divorce isn’t easy, but filing on your own while your divorce is still pending can come with its own set of challenges. Since you're still legally married until the divorce is final, you’ll likely need to include your spouse’s income and expenses in your bankruptcy paperwork. This can affect your monthly payment and possibly extend your repayment plan to five years instead of three.

Another thing to consider is how this could impact your divorce timeline. Chapter 13 cases usually last 3 to 5 years, and during that time, you won’t be able to sell assets or take on new debt without court approval. Meanwhile, your spouse — who isn't part of the bankruptcy case — may still be allowed to do those things through the divorce court. This can create an imbalance that’s hard to manage, especially if you’re already living separately.

In most cases, filing a solo Chapter 13 during a pending divorce doesn’t offer many advantages. But there are a couple of exceptions. Some people move forward with Chapter 13 if they’re trying to stop a foreclosure or car repossession. Others choose to file alone if their spouse isn't on any of the debts and they don’t live in a community property state. In these situations, a solo filing might make more sense.

Why Most People File Chapter 13 Bankruptcy After the Divorce Is Final

For many people, it makes more sense to file Chapter 13 bankruptcy after the divorce is final. Once your divorce is complete, you don’t have to involve your ex-spouse in the process. You won’t need to include their income or expenses in your bankruptcy paperwork, and your property and debts will already be divided through the divorce decree. That clarity makes it much easier to build a repayment plan that fits your situation.

Filing after your divorce is final can also help you:

• Avoid including your ex’s financial information in your bankruptcy paperwork.

• Know exactly which debts and assets you're responsible for, based on the divorce agreement.

• Use Chapter 13 to deal with joint debts that were shared during the marriage.

• Avoid ongoing coordination with your ex-spouse, which can be especially important if your relationship is strained.

• Include certain divorce-related debts, like property settlement obligations or attorney fees, once they’re finalized.

If you’re trying to eliminate your legal responsibility for a joint debt, keep in mind that creditors can still try to collect the full amount from your ex. And if your divorce decree says you’re responsible for that debt, not paying it could lead to problems in divorce court, even if you’re no longer legally responsible for it after bankruptcy. In some cases, your ex may be able to sue you if they end up having to pay a debt the divorce court said you would cover.

Another reason many people wait is that certain divorce-related debts — like money owed to your ex as part of a property settlement — typically can’t be included in bankruptcy until the divorce is complete. These kinds of debts can’t be discharged in Chapter 7, but Chapter 13 may allow you to discharge them in some cases.

Since timing matters, it’s a good idea to talk through your options with a bankruptcy attorney during a free consultation to figure out what makes the most sense for your situation.