Divorce Guide

Divorce Guide


Bankruptcy Divorce Settlement


Financial difficulties often create negative impact on the married life. The decision to file for divorce is hard and becomes harder when bankruptcy is involved. The minute bankruptcy is filed; all the assets become community property held to trust to pay any debts. In Bankruptcy Divorce Settlement the court grants an automatic stay, which prevents any of the creditors to ask for money. Filing for bankruptcy before divorce is worth consideration.

  • The first and the important consequence of a personís filing for bankruptcy is automatic stay. When bankruptcy is filed by you or your spouse the automatic stay forces to stop all efforts to enforce the collection of debt. In bankruptcy the obligations from a divorce to pay for support are not dischargeable. This may include the payments to support the minor child or a former spouse. While the support obligations which are no dischargeable include spousal support alimony and child support lawyer fees.
  • You should also check with your attorney whether he/she has discussed your options with the bankruptcy attorney representing you and your spouse. Filing for divorce depending on the personal situation can affect your ability to comply with the court order repayment plan, especially alimony payments or child support will be established.
  • In bankruptcy divorce settlement you should establish an agreement. This agreement should be acknowledged under bankruptcy repayment plan and should provide information about how the monthly payments should be divided. If by any chance you and your spouse are unable to come to an agreement, donít forget for any decision to make one spouse is only responsible for the debt which could be rejected by bankruptcy court.
  • If any one of the partner has filed for bankruptcy the properties that these partners own at the time of filing a bankruptcy is said to be the bankruptcy estate. This is used for payment of the debts. The bankruptcy court has the authority to declare that property is exempt which means that property cannot be called as a section of bankruptcy estate. At the same time this property cannot be sold for the repay of the debts. And now the divorce court can divide this exempt property as the federal law (bankruptcy code) and the laws of the state define property exemptions.
  • As discussed above the person filing for bankruptcy goes under automatic stay process, inspite of this process one of the spouses can request the divorce court to issue orders on the payment of alimony or child support. If any property settlement is related to some debts then it is referred as Non dischargeable in bankruptcy. This states that if any individual who is filing for bankruptcy is responsible for these debts and canít wipe it out. At the same time this individual can prove the following facts for the bankruptcy court to wipe out the debts.
  1. It is impossible for him/her to repay but manages himself/herself and his/her dependants, or
  2. It would be beneficial for this individual if the debt is wiped out which is more important than the harm caused to the ex spouse or the child due to non payment Hence in Bankruptcy Divorce Settlement one should be very much keen in the process of divorce so that all the financial assets are in the proper state.


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