How will bankruptcy affect my divorce case?

Divorce and bankruptcy are complex legal processes that can intertwine, presenting unique challenges and considerations. When facing both divorce and bankruptcy simultaneously, it is crucial to understand how these processes intersect. This article examines the major considerations surrounding bankruptcy and divorce, including the application of the automatic stay, effects on equitable distribution, child support, alimony, and non-dischargeable debts arising from marital settlement agreements.

1. Automatic Stay and Equitable Distribution:

- The Automatic Stay: When an individual files for bankruptcy, an automatic stay is triggered, which halts most collection actions and legal proceedings, including equitable distribution proceedings in divorce cases.

- Impact on Equitable Distribution: The automatic stay prevents the division and distribution of marital property until the bankruptcy case is resolved or an exception to the stay is granted. Divorce courts typically cannot proceed with property division until the stay is lifted or the bankruptcy case concludes.

2. Child Support and Alimony:

- Non-Dischargeability of Support Obligations: Child support and alimony (spousal support or maintenance) are considered priority debts and generally cannot be discharged in bankruptcy.

- Ongoing Obligations: Bankruptcy does not absolve the debtor of their responsibility to pay child support or alimony. These obligations must continue to be fulfilled despite the bankruptcy filing.

- Coordinating Payments: Debtors must ensure that child support and alimony payments are prioritized and paid regularly, even while going through the bankruptcy process.

3. Non-Dischargeable Debts from Marital Settlement Agreements:

- Debts Arising from Divorce Proceedings: Certain debts incurred in connection with a marital settlement agreement, such as debts assigned to a specific party or debts for property division, may be deemed non-dischargeable in bankruptcy.

- Debts Arising from Fraud or Misrepresentation: Debts arising from fraudulent or willful misrepresentations in a marital settlement agreement, including debts related to domestic support obligations, may be non-dischargeable in bankruptcy.

- Consult with an Attorney: It is crucial to consult with a knowledgeable bankruptcy attorney to understand which debts may be considered non-dischargeable and how they can impact the overall bankruptcy case.

4. Cooperation and Communication:

- Collaboration with Divorce and Bankruptcy Attorneys: It is important to maintain open communication and coordination between the divorce attorney and the bankruptcy attorney to ensure a comprehensive approach that addresses both legal processes effectively.

- Shared Information: Accurate and timely sharing of financial information between parties involved in the divorce and bankruptcy proceedings is crucial to ensure the best possible outcome for all parties involved.

Conclusion:

Navigating the intersection of bankruptcy and divorce requires careful consideration and guidance from experienced professionals. Understanding the impact of the automatic stay on equitable distribution proceedings, the non-dischargeability of child support and alimony, and the treatment of non-dischargeable debts arising from marital settlement agreements is essential. By working closely with both a divorce attorney and a bankruptcy attorney, individuals can navigate these complex processes and make informed decisions to protect their interests and achieve a favorable resolution.