Tempe Bankruptcy And Divorce Lawyer

Bankruptcies and divorces have serious impacts on each other, especially with respect to your property and personal finances.

Contact me, a Tempe bankruptcy and divorce attorney now to discuss your questions and concerns.

Effect Of Bankruptcy In Property Division And Debt Division In Divorce

When one or both spouses file bankruptcy, all of the community property, that is, property that was bought or acquired during the course of the marriage becomes a part of the bankruptcy estate and is available to pay debts. The bankruptcy estate is simply all of your property that you own at the time the bankruptcy is filed.

When you or your spouse file a bankruptcy, an automatic stay immediately prevents creditors from collecting on most debts; however, the automatic stay doesn't prevent you from asking the divorce court to order your spouse to pay child support or alimony.

Once a bankruptcy court decides property is "exempt," that is, it's not part of the bankruptcy estate and so it's not available to be sold to pay debts, the divorce court can then divide that property. Property exemptions are defined not only by federal law (the "Bankruptcy Code"), but also by the laws of the state in which the bankruptcy is filed.

Some examples of federal exemptions include:

  • A specified dollar amount for real property that's for his or her residence, and
  • A specified dollar amount for one motor vehicle, such as your primary car
  • Pensions, 401(k)s or other retirement.

Arizona Attorney Assisting With Property Settlement In Bankruptcy And Divorce

Negotiating a property settlement in the midst of bankruptcy is complicated. Debts related to a property settlement are presumed to be "nondischargeable" in bankruptcy, meaning that the person who files bankruptcy can't have those debts wiped out and must still be responsible for them. But the bankruptcy court will wipe out those debts if the person filing for bankruptcy can show:

  • That he or she can't pay the debt and still take care of him or herself and any dependents, or
  • That wiping out the debt would result in a benefit to the person filing the bankruptcy that outweighs any harm done to his or her former spouse or child by nonpayment.

If you think your spouse is contemplating bankruptcy after your divorce is final, you'll want to draft your property settlement in such a way that your spouse's obligation looks like a support obligation instead of a property settlement because support obligations are more difficult to have discharged. You can also protect yourself by attaching property liens or incorporating indemnity clauses into your divorce settlement.

Using My Financial Background to Your Benefit

The intertwined issues of divorce and bankruptcy are confusing at best, and highly damaging at worst. If you find yourself in this position, it makes sense to find a lawyer who can help you with all these issues.

With an MBA in finance and an LL.M. (post law degree) in taxation, I have the background to carefully analyze your and your spouse's financial circumstances in order to give you skilled, personalized advice about your divorce and bankruptcy options.

Contact Me, A Phoenix, Arizona, Lawyer With Questions About Property Liens

Whether you are considering filing for bankruptcy before your divorce, during your divorce or if you are concerned that your spouse may be taking advantage of the bankruptcy process, don't hesitate to contact me, an Arizona property settlement lawyer to discuss what I can do to aggressively protect your rights.