Filing For Bankruptcy During Divorce
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Filing For Bankruptcy During Divorce

Filing For Bankruptcy During Divorce
June 14, 2016

One of the most common reasons why married couples divorce is because of money issues, so it should come as no surprise that a significant number of people end up filing for bankruptcy after filing for divorce. What happens in these cases, then? If there is a divorce pending, and your spouse files for bankruptcy, what does this mean for you?

Show Me The Money – Alimony And Support In Bankruptcy

In a bankruptcy, the goal is to get a fresh start by having as much debt discharged as is allowed. Many debts are dischargeable, but some are not. In a Chapter 7 bankruptcy, debts for spousal support, alimony, and child support are nondischargeable debts. The bankruptcy laws provide for a priorities afforded to certain creditors of any debtor. Higher in the list of priorities are those to whom a debtor owes unpaid child support or alimony; debts owed to these creditors take precedence over debts owed to other non-family creditors. Additionally, the courts stand by the concept that it is the responsibility of both parents to care for their children and, as such, child support obligations are not dischargeable in a bankruptcy. This applies to both any accumulation of back child support owed as well as the obligation for future support.

What About Property?

One of the more difficult issues to resolve in a divorce proceeding is how to divide the property. This is obviously an even more difficult issue when there are debt issues involved. 11 U.S.C. Section 523(a)(15) states that debts incurred by the debtor during a divorce or separation or in connection with a court order such as a separation agreement or divorce decree are not dischargeable in Chapter 7, with certain limited exceptions. With respect to the division of property, courts require ‘stay relief’ in order to proceed – essentially permission from the Bankruptcy Court that allows Family Court to continue with the divorce case – and any issues associated with the equitable distribution component of the divorce action. What this means is that decisions about who is going to get how much of the family home, the pensions, and the stocks and bonds will be put on hold, at least temporarily. One component of marital property, along with marital assets, is marital debt; as may seem obvious at this point, getting the advice of an experienced attorney from the start will help make the entire process easier on everyone involved.

When Your Debt Has Led You To Bankruptcy, Contact The Law Office of Attorney Kevin M. Schmidt

If you are facing a financial situation in which you can see no way out, contact the Law Office of Attorney Kevin M. Schmidt. We have experience handling every bankruptcy scenario and can answer your questions about how a bankruptcy will affect you and those in your life. We can help you to make choices about how to get back on your feet financially and how your choices may be influenced by other factors in your life such as divorce or having children to support. Contact us today online or call us at 219.756.0555 for your free consultation.




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At the Law Office of Kevin M. Schmidt, P.C., we offer a free consultation during which we will examine the facts of your case and advise you on how best to proceed

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Merrillville, IN 46410
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We are a debt relief agency. We help people file for bankruptcy relief under the bankruptcy code. This website is designed for general information only. The information presented at this site should not be construed to be formal legal advice nor the formation of a lawyer/client relationship. Testimonials are not a guarantee, warranty, or prediction of the outcome of your case.