divorce bankrupt

Fact: Divorce is one of the leading predictors of both bankruptcy and home foreclosure.

Women are especially prone to a long-term financial fallout from divorce.

Within a year of the end of their marriages, women are three times more likely to live in poverty than men, according to U.S. Census Bureau data. The London School of Economics research found that women experience a 20 percent decline in income when their marriages end.

The financial pain continues into retirement age. According to a 2014 report by the General Accounting Office:

  • 4% of married men and 5% of married women over the age of 65 live in poverty
  • 11% of divorced men and 18% of divorced women live in poverty

How can you survive divorce, and not only stay financially solvent, but also thrive?

Divorce and financial problems are incredibly stressful. Get the help you need and deserve with therapy. Online therapy sites offer certified counseling for a fraction of the cost of traditional, in-person therapy. BetterHelp prices start at $40 per week for unlimited phone, text, email or video counseling. Check out BetterHelp now >>

Divorce bankrupted me: How much is a divorce? 

The cost of a divorce can range from under $500 for a DIY filing, into the tens of thousands of dollars. Typically, the more money you and your soon-to-be spouse have, the more a divorce can cost — and the greater chance of going into bankruptcy. Get a general idea of the cost by contacting local divorce or family law attorneys through free or discounted initial consultations.

Get a divorce settlement agreement + lawyer consult >>

Online, DIY divorces services like Rocket LawyerLegalZoom, Avvo and Justia provide free legal information searchable by state. Check with the school of law at your local college or university. Some offer free legal clinics to the public.

If your breakup is more or less amicable, with few assets and a general agreement about how time sharing with any children will be established, do-it-yourself online divorce services can be a great option. This is an option for uncontested divorces — where both parties agree on major decisions about child custody, spousal support and how assets are divided

If you’re going DIY, you will need to:

  • Check with your state and city or county clerk of the court to understand paperwork submissions and filing fees.
  • Choose a reputable document preparation service like Rocket Lawyer or use free resources provided by your state, city or county.
  • Create a detailed account of your divorce. Provide documentation about all parties, vital records, and decisions about child custody, support and property division.
  • Know the process and cost of serving your spouse. According to Oregon-based National Association of Professional Process Servers, the average cost is between $20 and $100.

CompleteCase is another great option that provides you with all the legal documents, online storage, and instructions for filing in your state, for a flat fee of $299. A rating with the Better Business Bureau and 30-day money-back guarantee. Check out CompleteCase now >>

Why is divorce so often cited as a reason for bankruptcy?

Again, after divorce, many people find their finances stretched. Some have to pay alimony, others find they're paying for new expenses such as child care, and most will find their expenses increased because they're no longer splitting bills with their now-ex.

Some people are pushed into bankruptcy by their former spouse. Let’s say they owned a house together but they either don’t want to sell it (because they want the children to keep living there) or they can’t sell it because it’s upside down. One of them agrees to pay the mortgage; it might be the spouse who lives there, or it might be the ex who is supporting him or her. But the mortgage doesn’t get paid. Maybe that spouse eventually files for bankruptcy, and the other one ends up having to file in order to keep the house and catch up on payments, or to discharge their responsibility for the remaining loan.

Can you file for bankruptcy during divorce?

Technically, yes, but you probably want to file in advance of your divorce, or after. Benefits of filing before your divorce (and not trying to overlap the bankruptcy and divorce):

  • You may save on attorney and filing fees by using the same bankruptcy lawyer as your husband or wife
  • You may qualify for more exceptions in the bankruptcy if you are married
  • The divorce proceedings can be simpler if you have discharged debts

Should I file for bankruptcy during or after divorce?

Wait to file for bankrupcy until after your divorce is finalized. This might be part of your divorce negotiations, and things you ask for in your divorce settlement.

How soon can you divorce after bankruptcy?

From legal site Nolo:

Chapter 7 bankruptcy is a liquidation bankruptcy designed to get rid of your unsecured debts such as credit card debt and medical bills. In Chapter 7 bankruptcy, you usually receive a discharge after only a few months. So it can be completed quickly before a divorce.

By contrast, a Chapter 13 bankruptcy lasts three to five years because you have to pay back some or all of your debts through a repayment plan. So if you were looking to file a Chapter 13 bankruptcy, it might be a better idea to file individually after the divorce because it takes a long time to complete.


How does bankruptcy affect divorce proceedings?

  • If you and your soon-to-be-ex are working with the same divorce lawyer, and one of you files for bankruptcy, you will each have to find a new attorney — as this creates a conflict-of-interest for the lawyer.
  • If you have filed for divorce, filing for bankruptcy will stop the  division of property proceedings

Does bankruptcy stop divorce proceedings?

If you have a pending divorce case, a bankruptcy filing will not affect custody or child support, but a bankruptcy filing will stop proceedings related to the division of property.

Does filing bankruptcy affect alimony?

Whether alimony is ordered as well as the sum ordered can be affected by any change in finances by either party.

How do I avoid bankruptcy during or after divorce?

If your goal is to avoid bankruptcy during divorce, read on … But in summary:

Take all steps to ensure financial stability after your divorce, including living in a home you can comfortably afford, legally dividing debt with your ex husband or ex wife, watch your credit, build your credit score, work with your accountant on tax filings after divorce, and focus on earning, saving and investing.

When you’re thinking about divorce and bankruptcy at the same time (but not yet sure)

Maybe you are exploring your options, or actively planning your escape. Perhaps it is a mutual, mature decision, or you are leaving a dangerous situation. The advice for all these situations is the same: plan, secure your own money, earning power and legal and financial information.

Try to be calm-headed and get the emotional support you need, so you make rational decisions from a place of confidence and security, opposed to fear and panic.

Meet with a lawyer

First, educate yourself about how assets, property and debt are divided in divorce.

Many family and divorce lawyers offer a free first visit, which can not only give you a sense of whether this person is a good fit, but you can get free legal advice. Take notes! You may choose to DIY your divorce online, work with a mediator or choose collaborative divorce. But, research your options, first, including RocketLawyer.

RocketLawyer review: Divorce legal help and documents for cheap

CompleteCase is another great option that provides you with all the legal documents, online storage, and instructions for filing in your state, for a flat fee of $299. Check out CompleteCase now >>

Get immediate answers to legal questions from a licensed family lawyer or bankruptcy attorney through JustAnswer, which provides expert advice via chat, for prices starting at $5/week unlimited.

Call your accountant and financial planner

Tell them what is on your mind, and ask them what information you need to collect, and moves you should make to help you make your decision.

Research what you need to know about taxes, divorce and filing as head of household after a separation.

Collect all the docs for divorce

The more you know about your financial situation, the better your chances of making wise decisions from a place of confidence and knowledge — not fear and panic. In initial meetings with attorneys, the more information you can provide, the better advice they can offer.

Also, it is very common for spouses to enter the divorce process with huge blind spots in their financial picture. Collect:

  • Tax returns for the past three years
  • Pay stubs and W-2s for both partners for past three years
  • All bank, savings, investment, and retirement accounts. Note whose name is on each of these accounts.
  • Statements for all debts: mortgages, home, student, credit card, medical, family and friends. Again, note whose name is on each.
  • Estate plans, including wills, durable power of attorney, trusts and life insurance.
  • Monthly household budget, including child care, school tuition, kids’ extracurricular activities, utilities, and food.
  • Employment contracts
  • Pension statements
  • Health insurance information. If your family relies on your employer’s plan, get the most current information on the premiums for a whole family, single person, or one parent and children. Find out this information for your spouse’s employer, and / or, on the marketplace.

Understand your home's value

Your home is likely your biggest investment, and one of the highest-conflict issues in divorce. Locate your mortgage statement, understand whose name is on the note, the interest rate, and remaining balance. To understand whether you can afford to keep the home, or whether it makes sense to sell, calculate property tax, home association fees, utilities, repairs and maintenance (either commit to doing all the lawn work and house cleaning, or find a reliable gardener through TaskRabbit and a housekeeper on Care.com!).

Then, research your home value on Trulia or Zillow, to calculate any equity you have in your home (which should be split between you and your spouse, assuming you bought the home together and a prenuptial agreement does not preclude this).

Related: How is property divided in a divorce and who gets the house?

How much money you will need to live after divorce — and budget a plan to earn it

Alimony law is changing quickly, and lifelong maintenance is quickly becoming a thing of the past. Stay-at-home parents may receive short-term alimony until they can rebuild a career, and increasingly, as women earn and achieve professionally, it is the ex-wives who are required to pay spousal support, as well as child support.

The first step is to track spending and create a single-mom budget. I like the budget app Money, an easy-to-use money app to track your spending and create a budget — then get alerts to help stay on track. Check out MoneyPatrol now for free >>

Include your income — including child support and alimony.

Then subtract:

  • Housing
  • Utilities
  • Cell and internet
  • Child care
  • Diapers and formula if you have a baby
  • Groceries and restaurants
  • Car costs, including payments, gas, insurance, repairs
  • Insurance, including medical, life insurance, disability, homeowners or renters,
  • Debt repayment
  • Kid expenses like school lunches, school and activity fees, orthodontists, camp, clothes, allowances

Do not ignore retirement and other long-term financial planning. I understand that you are likely stressed about your month-to-month budget, but even modest planning now.

Related: Best money saving tips for single moms

If you need fast, extra cash (not necessarily a new job or career), here is my list of 101 ways to make extra money. Advice includes easy ways to sell things you have, the best online survey companies, online English tutoring, and rent stuff you own, like your home or car.

Other tasks you must tackle, make or save or protect your money:

Sell your engagement ring

Look, I know you used to love it, and maybe still do. But trust me: you kids don't want a piece of jewelry that represents a marriage that went down in flames.

Just get rid of the damn thing, take the money, pay your bills, do something fabulous with it, just move on.

I've researched all the places to sell fine jewelry, and Worthy stands out, hands down.

Visit Worthy, the #1 online diamond and jewelry marketplace >>

Sell other jewelry and watches

I understand how sentimental jewelry can be.

But if you're not wearing it, don't enjoy it, or otherwise have skeezy feelings about fine jewelry (including items that are inherited and estate items, watches, loose diamonds, gold, or gifts from other people [other dudes, perhaps?!], that is untapped cash sitting in your jewelry box or safe, and it needs to go. Sell your jewelry >>

Lower your bills with a bill cancellation service

There is a good chance that you subscribe to a number of services that you don't use or need (gym membership? streaming services you don't watch? online security apps?). There are some great bill cancelation services that will comb your bank or credit card accounts, identify recurring charges, and cancel for you any that you choose to. 

TrueBill takes it a step further, and will negotiate down bills, like your cell phone, Internet, cable, insurance and gym membership — for free. 

TrueBill saved me $16 off my monthly AT&T bill while also getting me a bigger plan, and $23.20 from my TimeWarner / Spectrum Internet bill.

Check out TrueBill now >>

Sell your wedding dress

I get that feel sentimental about it, worry your kids will want to see it, or wear it one day. Yet there was heartbreak, and the union is over.

Down in flames, maybe. So many conflicting feelings about that gown. Let me help you out here. Sell the damn thing.

Here is a whole post about ways to unburden yourself by purging your wedding dress. My favorite online site for selling your wedding dress is NearlyNewlywed. Read my review of NearlyNewlywed here.

Refinance debt

Credit card, student loans, personal loans, mortgage, car note.

This might take a couple of months to sort out, but by smartly consolidating or refinancing loans, you can save big bucks each month debt repayment.

A 0% balance transfer credit card can make a huge difference. Find one here >>

If your credit score has seen better days, work right now on improving your score with credit repair.

Get your FREE FICO credit score and credit report with Experian.

RelatedHow single moms can pay off debt

Get a life insurance quote

You may be paying too much for life insurance, or need less coverage than you did before. Also, now that you are a single mom, your kids and any other family member you care for are likely to rely on your income alone.

Bestow life insurance guarantees no medical exam, and prices start at less than $8/month, for a $50,000, 10-year policy. Get a life insurance quote now from Bestow >>

Update your car, and homeowners or renters insurance

I realized that I was paying a $100 homeowners insurance rider for my now-sold engagement ring — three years too late!

If you are still in the same home you lived in with your ex, you are probably still on the same homeowners' policy.

Have you called your broker and revisited it?

Think about all the stuff your ex-owned, and was insured — vehicles, electronics, musical instruments, watches, and jewelry.

Switch to a more affordable car

If your ride is more than you can afford, time to downgrade.

I appreciate that you might love your wheels, but you love financial independence and the lower stress that goes with it!

Read my post: Car buying for women for everything you need to know.

Make sure that all the assets you are owed are in fact transferred to you

When I was going through my own divorce, every step was so emotionally training, mentally painful, and financially exhausting.

There were weeks and even months when I procrastinated on taking the next step because I knew it would be yet another battle, more lawyer bills, and a cesspool of old emotional trauma that I'd have to relive.

That said: Press on, mama!

The sooner you wrap up the legal part of your divorce, the sooner those attorney bills stop arriving in your mailbox, and the sooner any money coming your way will, in fact, come your way.

Educate yourself about how property is divided in a divorce.

This includes:

  • Make sure any child support and extras are calculated and being paid automatically to your bank account via your ex's bank account
  • Real estate issues: Make sure that any steps regarding your home or other real estate are underway: Refinancing the home in the name of either your or your ex, list the home (or other property) for sale so you can get your share of the equity, or otherwise unburden yourself legally from any real estate debt
  • If you own cars, ensure that one is in your name only, and you are not on the hook for any car note that should be his.

Repair your credit after bankruptcy and divorce

Credit fraud and identity theft are very common during divorce — for both adults and children.

Further, a good credit score and history are critical to landing on your feet after divorce. After all, you are likely to need a credit card to pay for attorney fees and establish a new household, as you may need to find a new apartment or finance a new or existing mortgage, or otherwise obtain credit to move into your new life.

Run a credit score check on yourself and your spouse, and work to clear up any errors or defaults. Understand which accounts you are responsible for, and prioritize making sure these are up-to-date, and error-free.

Get a free credit report and FICO score from Experian >>

Understand that in a divorce, any debt shared by the two of you will de divvied up — but that does not affect your agreement with the lender. So, if your spouse will be held accountable for the balance on a shared credit card, understand you are responsible for that debt until your name is removed from the card.

If you have a short credit history, bad credit, or no credit history, open a secured credit card, charge on it monthly, and always pay off the balance on time to build your credit. (Resource: Find a secured credit card)

To repair your credit, there are DIY credit repair and credit repair options to consider.  While cleaning up your credit report is worthwhile, it's also time consuming, so check out The Credit People if you need to repair your credit, but you're short on time. Get started repairing your credit for just $9 for the first month >>

When you’ve filed for divorce and bankruptcy

One of the most common mistakes that divorcing couples make is to ignore the monthly bills, assuming that the other is paying them, or that failure to pay will harm the other. Take neither of these ideas for granted. The most important thing you can do during this time of transition and turmoil is stay on top of your mortgage, taxes, utilities, credit card and other debt, insurance, and tax bills.

Get and maintain your own accounts

When it has been established that a divorce is happening — regardless of whether or not both parties agree — quickly move to separate all your accounts: checking account, savings account, and credit card. CIT Bank has one of the best offers with a high-interest rate money market account.

It is common for one party to withdraw large sums of money, or make large charges on a credit card, without the other’s knowledge or consent. If you are tempted to make such withdrawals and charges, don’t! You will likely be held accountable later, and this will heighten any conflict in the proceedings — which will only cost you in attorney’s fees and ill will with your ex.

If you have a shared cell phone plan, get your own line for the sake of privacy, and as a step towards you own, independent life.

Continue to monitor, build and grow your credit

No matter what the court orders and settlement agreements say, divorce is one of the most common times when errors, fraud and damage can happen to your credit. Check your credit score for free at Experian to find out where you stand. Then set up alerts for any flags on your credit report, and keep an eye on your score as accounts are opened, closed and names are removed.

Remember: even if an agreement or court order mandates your ex make payments on debt you once shared, you are still responsible for that balance as long as your name is on the account. By the way, do you know what your score is right now?

Change your estate plan

You may never have had an estate plan in the first place. Regardless, now is the time to revisit your will, trusts, legal power of attorney and other legal documents must be revised to reflect your new life. Companies like Rocket Lawyer and LegalZoom can help you through this process.

Learn more about estate planning for single parents.

Increase your income after divorce

At least in the short-term, both parties are poorer after divorce. It is twice as expensive to maintain two homes instead of one, and you may find yourself making alimony and child support payments, which can be steep, and your attorney can help you understand what to expect.

You need to find ways to earn more money, sooner than later.

This may mean buckling down on your goals in your current job, discussing with your boss a plan for advancement, asking for an overdue raise, or strategizing to change companies, launch a side business, or return to school to switch careers altogether.

If you are currently staying home full-time with children, it is time to get back to work. Alimony law is changing, and judges expect both parents to work full-time. Child support should not be expected to cover all of your expenses. Plus, a career of your own is the best financial security for you, your family, and your relationship with your ex-long-term.

Regardless, the sooner you take steps to improve your income, the quicker you will move forward after divorce.

[How to build financial success as a single mom]

Thanks to technology and a changing work culture that values parents and is happy to offer flexible, temp, telecommute, remote and other work-at-home opportunities, there are countless quality, legit jobs and careers that pay well, and also provide the flexibility to spend time with your family, working out, build a side gig, or otherwise enjoy life.

In fact, working from home tops my gratitude list most days, as it has allowed me to devote concentrated sums of time building a business that I love, pays well, and allows me to spend as much (or little! Let's e real here!) time with my kids as I need to.

Check out the top, high-paying careers that you can do from home.

The list includes: programmer / coder, graphic designer, translator, virtual assistant, social media manager, corporate event and travel planner, bookkeeper, child care provider, blogger and grant writer.

My favorite job board for moms is FlexJobs — the leading job site specifically for telecommuting, part-time, flexible-time, online, work from home, and other alternative work arrangements that make such a big difference in families’ lives.

About Emma Johnson

Wealthysinglemommy.com founder  Emma Johnson is an award-winning business journalist, activist and author. A former Associated Press reporter and MSN Money columnist, Emma has appeared on CNBC, New York Times, Wall Street Journal, NPR, TIME, The Doctors, MONEY, O, The Oprah Magazine. Winner of Parents magazine’s “Best of the Web” and a New York Observer “Most Eligible New Yorker," her #1 bestseller, The Kickass Single Mom (Penguin), was a New York Post Must Read. A popular speaker, Emma presented at the United Nations Summit for Gender Equality. Emma's Top Single Mom Resources.

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