Divorce and Bankruptcy in New York

It depends on your situation. Filing before divorce can simplify property division by eliminating joint debts, and you can file jointly to save on fees. Filing after divorce may be better if you need to use single-filer income limits for the means test or if your divorce settlement assigns debts that you want to discharge. A New York bankruptcy attorney can help you weigh the timing.

Filing Order: Bankruptcy Before or After Divorce?

Bankruptcy First

Eliminates joint debts before property division, simplifying the divorce
You can file a joint petition and split the cost (one filing fee instead of two)
Both spouses can use their full New York exemptions
Faster resolution - Chapter 7 takes 3-4 months
Requires cooperation between spouses on the petition

Divorce First

Single-filer means test uses only your income (median $66,973 for 1 person in NY)
May qualify for Chapter 7 on single income when household income was too high
No need to cooperate with ex-spouse on bankruptcy paperwork
Divorce decree may assign specific debts, clarifying what you owe
Higher total cost (two separate filings if both need to file)

What Bankruptcy Cannot Discharge

Domestic Support Obligations (DSOs)

Under 11 U.S.C. section 523(a)(5), the following debts survive bankruptcy and cannot be discharged in any chapter:

Child support (current and past-due)
Alimony / spousal maintenance
Any debt designated as a domestic support obligation

The automatic stay does not stop collection of DSOs. Child support enforcement, wage withholding for support, and paternity/custody proceedings all continue during bankruptcy.

Property Settlement Debts

Under 11 U.S.C. section 523(a)(15), debts owed to a spouse or former spouse from a divorce decree, separation agreement, or property settlement are not dischargeable in Chapter 7. However, they may be dischargeable in Chapter 13 - this is one reason some filers choose Chapter 13 after divorce.

Joint Debts After Divorce

One of the most common problems: your divorce decree says your ex-spouse is responsible for a joint credit card or mortgage, but they file bankruptcy and discharge it. The creditor can still come after you because the divorce decree is between you and your spouse - the creditor was not a party to it.

Options in this situation:

File your own bankruptcy to discharge the debt
Go back to family court to modify the divorce decree
Negotiate directly with the creditor

New York is an equitable distribution state, meaning property and debts are divided fairly but not necessarily 50/50. This can create complex situations when bankruptcy is added to the mix.

New York-Specific Considerations

Equitable distribution. New York divides marital property equitably, not equally. The bankruptcy court and divorce court may have overlapping jurisdiction over the same assets.
Homestead exemption. The New York homestead exemption ($179,975--$215,550 by county) protects equity in your primary residence. If you and your spouse own a home jointly, the timing of bankruptcy and divorce affects how this exemption applies.
State vs. federal exemptions. New York lets you choose between state and federal exemptions. A bankruptcy attorney can help determine which set protects more of your property in a divorce situation.
Mandatory settlement conference. New York requires a settlement conference in foreclosure cases. If your home is at risk in both a divorce and a bankruptcy, this process may run in parallel.

Frequently Asked Questions

Should I file bankruptcy before or after divorce?

Can bankruptcy discharge alimony or child support?

No. Alimony and child support are classified as domestic support obligations (DSOs) under 11 U.S.C. section 523(a)(5) and cannot be discharged in any chapter of bankruptcy. These obligations survive bankruptcy and collection of DSOs is not stopped by the automatic stay.

What happens to joint debt after divorce if my ex files bankruptcy?

If your divorce decree assigns a joint debt to your ex-spouse and they file bankruptcy, you are still liable to the creditor for the full amount. The creditor was not a party to your divorce and the divorce decree does not change the original contract. You may need to file your own bankruptcy to address this.

Can I file joint bankruptcy during a pending divorce?

Yes, you can file a joint bankruptcy petition while a divorce is pending. This can be an efficient way to eliminate joint debts before the divorce is finalized. However, both parties must cooperate on the petition and schedules.

Does bankruptcy affect property division in divorce?

The automatic stay can pause divorce proceedings related to property division while the bankruptcy case is open. However, family court proceedings regarding custody, visitation, child support, and domestic violence continue. New York is an equitable distribution state.