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Divorce & Bankruptcy: What You Need to Know?
If you are going through a divorce in New Jersey and your spouse has filed for bankruptcy, it’s crucial to understand how this can impact the outcome of your case. Please continue reading as we explore how bankruptcy can impact divorce proceedings, what steps you can take to protect your rights, and how a determined Ocean County Divorce Attorney can assist you during these difficult times.
How Can Bankruptcy Affect My Divorce?
If your spouse files for bankruptcy during your divorce, it’s important to understand that this can have a significant impact on the outcome of your case. While it won’t necessarily impact issues such as child custody, child support, or alimony, it will affect your property division and debt allocation in the divorce settlement. Bankruptcy filings can create an “automatic stay, which will temporarily halt most collections efforts on debts, including those involved in your divorce proceedings. Essentially, the court cannot proceed with dividing property between spouses until the bankruptcy case is resolved. This can delay your divorce and impact your ability to claim certain marital assets.
Generally, if your spouse files for Chapter 7 or Chapter 13 bankruptcy, the courts will appoint a bankruptcy trustee to administer the case. The trustee is responsible for determining which of your assets are property of the estate and whether they should be sold to pay creditors. After the bankruptcy case is resolved, the remaining assets will be subject to equitable distribution.
It’s important to consult an experienced family law attorney who can help you carefully asses which debts are considered “joint” and which are solely your spouse’s to determine who will bear responsibility for them following the bankruptcy discharge.
What Should I Do if My Spouse Files for Bankruptcy During Our Divorce?
When your spouse files for bankruptcy, you must inform your divorce attorney and discuss how to proceed with your divorce case. They will likely advise you to gather all relevant financial records, including joint bank statements, credit card statements, and property deeds to assess your assets and debts. Depending on the unique circumstances of your situation, they may be able to negotiate a settlement with your spouse. This must be done quickly to ensure your interests are protected before the bankruptcy court makes any decisions regarding asset distribution.
You should note that Chapter 13 bankruptcy cases usually take three to five years to complete. If your spouse files for Chapter 13 bankruptcy, you might not have to wait for their repayment plan to finalize before you can continue with divorce proceedings. Your attorney can assist you in petitioning the bankruptcy court to lift the automatic stay so you can proceed with the dissolution of your marriage.
At the Law Office of Sarina Gianna, LLC, we are prepared to help you achieve the best possible outcome for your case. Connect with our firm today to learn more about what we can do for you during these tough times.