Bankruptcy and Divorce
Know if an automatic stay in a bankruptcy filing will have an effect on your spouse during a divorce
With the recent economic meltdown in the U.S, there is a remarkable increase in the people filing bankruptcy and divorce. Filing bankruptcy can discharge a considerable part of your unsecured debts. But you must be wondering if it will be beneficial to file bankruptcy while the divorce procedure is still pending. But this will depend on the situation of the debtor and the debtor’s spouse. This is considered to be an ideal debt relief program to wipe out your debts effortlessly. So, if you are contemplating filing for bankruptcy then here are some important factors that you need to know in case the divorce proceeding is pending.
What is the appropriate time for filing?
If you and your spouse have overwhelming debt then it is recommended to file bankruptcy before filing for divorce. Declaring bankruptcy will help you discharge your financial obligations; thereby, making it easier to solve the problem of division of debts.
How can you save while filing?
You can save a huge amount if you file a joint bankruptcy petition as you have to pay for one filing fee. But filing after divorce would make each spouse pay separately for the filing fee.
What will be the impact of automatic stay?
With the filing of the bankruptcy petition, the automatic stay is put into place. This automatic stay prevents creditors from any kind of collection action. It will also stop any cases recently pending against the debtor till the bankruptcy case ends. But domestic relations cases will continue even after the bankruptcy petition.
Remember that your ex-spouse is still liable to file petition to collect alimony, child support, or other moneys due as a result of settlement despite the automatic stay. According to the Bankruptcy Code, the following domestic relations actions continue after filing bankruptcy:
- Custody of your children and visitation case can be filed
- You are eligible to file a domestic violence case
- Filing a case to establish or rearrange child support
Even after filing bankruptcy, the automatic stay would not stop the garnishment of post-petition wages or the levy of pension plans to meet domestic support obligations. Also if you are under domestic support arrearages, automatic stay would not stop license suspension or tax refund offsets.
A proficient bankruptcy attorney can give you detailed information about how bankruptcy can affect your divorce petition. Then it will be easier for you to decide whether you should declare bankruptcy before or after you file for divorce.
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