Should You File For Divorce and Bankruptcy Together?

 Posted on June 09, 2025 in Asset Division

When high-net-worth couples face both relationship and financial distress, they must make strategic decisions about how and when to file for bankruptcy. As of June 2025, Illinois law allows spouses to file bankruptcy jointly if they are married at the time of filing. But filing together is not always the best path, especially in divorces involving complex asset portfolios, property valuations, and long-term tax considerations.

In Kane County, couples navigating divorce and bankruptcy at the same time should consult with an Illinois divorce attorney who understands how these two legal processes work together and how timing can impact the outcome of both.

Can You File for Bankruptcy Jointly During Divorce?

In Illinois, married couples can file for bankruptcy together under either Chapter 7 or Chapter 13. Once a divorce is final, however, joint filing is no longer an option. This creates a narrow window during which both spouses can use bankruptcy to eliminate unsecured debts and simplify the divorce.

Joint filing can be beneficial if both parties are cooperating and want to discharge credit card debt, medical bills, or personal loans before dividing assets. But it can also raise complications, especially if spouses do not trust one another or have very different financial situations.

When Should High-Net-Worth Couples Consider Separate Bankruptcy Filings?

Joint bankruptcy is not ideal for every couple. In high-asset divorces, separate filings are often more appropriate for the following reasons:

• One spouse may qualify for Chapter 7, while the other must file under Chapter 13 based on income.

• One spouse may want to protect non-marital property or business assets.

• There may be disputes about joint debt responsibility or concerns about one spouse hiding liabilities.

Separate filings allow each spouse to address their individual financial obligations and protect their individual credit and post-divorce financial goals. A Certified Financial Litigator like Tim Weiler can assess whether a joint or individual filing strategy aligns better with the couple’s broader financial picture.

What Should Come First: Divorce or Bankruptcy?

There is no one-size-fits-all answer. In some cases, filing bankruptcy before divorce is ideal, because it eliminates joint debt and streamlines property division. In other cases, particularly where one spouse suspects the other of financial misconduct or dissipation, finalizing the divorce first may be a safer bet.

Bankruptcy courts and family courts operate independently, but both deal with property, income, and liabilities. Filing in the wrong order or at the wrong time can result in stay violations, inconsistent orders, or loss of financial leverage. 

Couples with significant assets should also consider how bankruptcy affects spousal support, taxes, and future investments. This is especially true if you are confronting serious financial problems like being underwater on a high-value mortgage. Support obligations generally cannot be discharged in bankruptcy, and many tax liabilities require special handling. A coordinated legal approach is essential. 

What Happens with the Property Division Process in Bankruptcy?

If a divorce is pending when one spouse files for bankruptcy, the automatic stay may pause property division temporarily. The family court may need to delay finalizing the divorce until the bankruptcy is resolved, especially if the bankruptcy trustee needs to evaluate or liquidate marital assets.

In a Chapter 7 case, non-exempt property may be sold to pay creditors before it can be divided in divorce. In a Chapter 13 case, the repayment plan may tie up future income for years, affecting support or maintenance calculations. This is why high-net-worth couples should work with legal representatives who understand how property characterization and timing affect both proceedings.

Contact a St. Charles, IL Divorce Attorney

If you and your spouse are considering both bankruptcy and divorce, do not proceed without experienced financial guidance. Tim Weiler is a Certified Financial Litigator who helps high-asset couples navigate these complex and overlapping issues with skill and precision. Contact a Kane County, IL divorce attorney at Weiler & Associates, Inc. by calling 630-331-9110 today.