Divorce and Bankruptcy

March 7, 2016

According to the American Psychological Association, about 40 to 50 percent of married couples in the United States get divorced. While getting divorced may not be the easiest process, if you happen to be involved in an active Bankruptcy case, it can add additional step to complete your divorce proceeding. The good news for those going through a divorce is that you can still complete the process if you or your spouse are involved in a bankruptcy.

As part of your divorce proceeding, the Judge will divide the family assets between the spouses. If you are in a Bankruptcy, this division of assets is prohibited unless approved by the Bankruptcy Court. After the Bankruptcy is filed, all of your assets become property of the Bankruptcy estate. The automatic stay, which provides protection from your creditors, prevents distribution or liquidation of the bankruptcy estate without permission from the Court. In order to proceed with the divorce in State Court, your Bankruptcy Attorney will need to petition the Bankruptcy Court for permission to proceed with the State Court Divorce proceeding. This is generally accomplished by filing a Motion for Relief From Automatic Stay in the Bankruptcy Court. Once the Automatic Stay is lifted for the purpose of filing divorce, you will be able to proceed in the State Court.

If you are involved in an active Bankruptcy case, you should discuss your situation with your Bankruptcy Attorney to make sure you are properly following the rules of the Bankruptcy Court. If you are considering filing for bankruptcy please call the experienced attorneys at Fears | Nachawati Law Firm to set up a free consultation. Call 1.866.705.7584 or send an email to fears@fnlawfirm.com.

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