My Ex-Spouse Has Filed For Bankruptcy, Can I Still Enforce My Divorce Judgment?
- March 2, 2014
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As if a divorce and a bankruptcy are not complex and anxiety-producing enough on their own, what happens when a bankruptcy and divorce have overlapping issues? For instance, what happens when an ex-spouse files for bankruptcy when he or she is bound by a divorce judgment? The U.S. Bankruptcy Code under 11 U.S.C. 523(a)(15) specifically provides that non-support related obligations and debts that are related to contemporaneous or prior divorce proceedings are not dischargeable in Chapter 7 bankruptcy cases, if such a discharge would harm the spouse/ex-spouse of the debtor. The primary issue for a court to consider in a divorce case involving bankruptcy is whether a particular debt is classified as a support obligation or a property settlement claim. The language of the U.S. Bankruptcy Code is such that it intends to provide financial relief for the debtor while simultaneously remaining sensitive to the needs of a non-debtor spouse or ex-spouse and the minor children of the parties. With regard to equitable distribution and debts in a Chapter 13 bankruptcy, the debtor must make all of his or her payments pursuant to a repayment plan to obtain a discharge of debts. In these cases, the bankruptcy court will have to decide whether a divorce debt is a non-dischargeable support obligation or a marital debt which may be discharged. To do this, the court may undertake a two-part analysis that was established in In re Gianakas, 917 F. 2d 759, 762 (3rd Cir. 1990). First, the court must review the language of any applicable property settlement agreement or Final Judgment of Divorce to provide evidence on the nature of a debt. If this analysis does not yield relevant information, the court must review any relevant secondary evidence that may elucidate the nature of a debt as a means to determine whether or not it is a support debt. In addition, the court must consider a set of factors when making its determination such as: the parties’ financial circumstances at the time of their divorce, the function served by the debt/obligation at the time of the divorce, and whether or not the debt/obligation functions to maintain the necessities of the non-debtor party such as shelter, food, and transportation. If you are having trouble dealing with your consumer debt issues and you want to explore how filing for bankruptcy and divorce will affect each respective process, it is imperative that you seek the advice of experienced legal counsel to advise you on these issues. For more information on bankruptcy and divorce, chapter 7 bankruptcy, chapter 13 bankruptcy or any other consumer debt issues visit TheNJBankruptcyAttorney.com. This blog is for informational purposes only and not intended to replace the advice of an attorney.