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Bankruptcy Can Complicate Divorce

When one or both spouses file bankruptcy, all of the community property 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 bankruptcy, an automatic stay immediately prevents creditors from collecting on most debts. However, it 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.

Examples of federal exemptions include:

  • A specified dollar amount for real property that serves as a residence
  • A specified dollar amount for one motor vehicle, such as your primary car
  • Pensions, 401(k)s or other retirement funds

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 to give you skilled, personalized advice about your divorce and bankruptcy options.

Questions About Divorce And Bankruptcy?

Whether you are considering filing for bankruptcy before or during your divorce or you are concerned that your spouse may be taking advantage of the bankruptcy process, don’t hesitate to contact me.

Call my Tempe, Arizona, office at 480-730-5400 or email me for a consultation.