Archive for the ‘Divorce and Bankruptcy’ Category

Will A Bankruptcy Filing Or My Spouse’s Bankruptcy Filing Affect My Rights in a Divorce Proceeding

Monday, August 10th, 2009

In the American Bar Association manual, “The Family Lawyer’s Guide to Bankruptcy,” Shayna and Bruce Rosenfeld state that one quarter of all bankruptcy filings are caused by divorce.

I believe that the converse is true as well:  financial strains that lead to bankruptcy cause divorce.

Typically, the spouse who files bankruptcy is the one obligated to pay alimony, child support and make the hold harmless payments.

A bankruptcy filing, however, may be of benefit to both divorcing spouses, as the debtor-spouse can discharge non-marital debts and free up money to pay the divorce-related debt owed to the other spouse.

At one time, bankruptcy was an effective weapon to thwart or impede a divorce or undo the result obtained after a settled or contested divorce. However, on October 17, 2005, Congress enacted the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 (“BAPCPA”) that dramatically changed the ability of a bankruptcy case to do so.

A debtor’s ex-spouse is a great beneficiary of this legislation, as Congress has made it substantially more difficult for a debtor to escape divorce-related obligations, as debtors generally may now thwart or impede a divorce-related obligation only if the obligation is considered to be a property settlement (rather than alimony, maintenance or support) and if the debtor is able to successfully navigate his or her way to a Chapter 13 discharge via three to five years’ worth of plan payments to a Chapter 13 trustee.

There are other creative uses of BAPCPA to deal with family law obligations. Therefore, a divorcing spouse or a soon-to-be divorcing spouse should seek counsel from a seasoned bankruptcy attorney to discuss the pro’s and con’s of filing for bankruptcy protection and to discuss the pro’s and con’s to defending actions taken by a spouse who has filed for bankruptcy protection.

Please call me to discuss your situation at (570) 823-9400 or send an e-mail to me at davidharrisesq@epix.net. You may also write to me at 15 Public Square, Suite 310, Wilkes-Barre, PA 18701.

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