DIVORCE AND BANKRUPTCY

This blog is not intended to render legal services to the reader, including advice about bankruptcy or taxes. Consult with a lawyer concerning the specific application of the law to your unique circumstance.

Divorce is one of the leading causes of bankruptcy filings. In today’s economy, not only are courts dissolving marriages, they are dividing assets, distributing debts, and awarding support obligations between the divorcing couple. The orders that a court enters with regard to the distribution of assets and liabilities have a profound impact on the bankruptcies subsequently filed by divorced individuals.


For example, both parties may be jointly liable for a car loan. In the course of a divorce proceeding, the court may order that the husband be responsible for the entire car loan, or for a particular portion of that loan. How the court words its order can determine whether the husband subsequently filing for bankruptcy can actually discharge that loan or the deficiency resulting from repossession.

If the court orders the husband to pay the car payment to the wife as part of a domestic support obligation, the husband would not be able to discharge that debt in his subsequent bankruptcy because domestic support obligations are not dischargeable in bankruptcy. However, if the Court orders that the husband be solely liable to the automobile financing company for the loan, then the husband would be able to discharge that debt in a subsequent bankruptcy.

Consequently, divorcing couples need to retain divorce attorneys who have knowledge of bankruptcy law as it relates to the distribution of debts and to awards of domestic support obligations. At Pesner Kawamoto Conway, PLC our attorneys are experienced in both bankruptcy law and in domestic relations law; and we provide comprehensive advice and guidance to divorcing parties who may need to subsequently seek the protection of the bankruptcy court

Deborah Winstead