Hafemeyer Law

Divorce and Bankruptcy

When an individual files for bankruptcy 11 U.S.C. § 362(a) most creditor and legal actions are place on hold or “stayed” until the bankruptcy case is adjudicated. However, there are some legal actions which the courts have determined are important enough that they are excepted from the automatic stay. These exceptions commonly include criminal proceedings, paternity, support, child custody, visitation, dissolution of marriage and legal proceedings that relate to domestic violence.

The automatic stay allows debtors to obtain a breather from collection actions and attempts to preserve any assets in the bankruptcy matter for possible distribution to creditors. However, debtors who are in the midst of a divorce or custody matter will likely not gain relief from those proceedings while requesting a discharge from the court.  Divorcing spouses may still request spousal maintenance (alimony) or child support payments during the bankruptcy proceeding.

The resolution of the custody and divorce proceedings will likely be affected by the bankruptcy proceedings so it will be important to ensure that legal counsel is aware of the possibility of discharge of debts and how that will affect marital assets in a division of property. At the close of the bankruptcy proceeding, the court will determine what marital assets are exempt from being used to pay creditors and those assets will be distributed at the close of the divorce.

Comments are closed.