Both divorce and bankruptcy are two significant events that people generally do not wish to experience in life, especially not at the same time. However, it is very possible for the two to overlap. If one spouse files for bankruptcy during this time, it can cause certain complications. It is because of this that it is important to know what to expect. When facing these situations, it can be beneficial to have the guidance of an experienced New Jersey divorce attorney.
What Happens When Bankruptcy is Filed During a Pending Divorce?
When discussing bankruptcy, it is important to understand one of the fundamental concepts. This is the “automatic stay.” When a spouse files for bankruptcy, the automatic stay goes into effect immediately. This can be a great help to the debtor, as it not only prohibits creditors from collection activities, but it puts other legal proceedings on hold. This can include divorce proceedings. While this can help the spouse who owes debts, it can be a problem for the other spouse.
How Can Bankruptcy During a Divorce Impact Me?
Another factor of bankruptcy to be aware of is dischargeable debts. The nature of debts that can be discharged can vary depending on the bankruptcy case. When this takes place during a divorce, there are often similar requests. This is often to discharge claims of alimony, child support, or property settlements. It is important to know the decision is ultimately up to the bankruptcy judge in charge of the case. However, the following are general rules that tend to apply in most New Jersey cases:
- Claims for alimony generally cannot be discharged in a bankruptcy proceeding
- Claims for child support generally cannot be discharged in a bankruptcy proceeding
- Claims for property settlements may generally be discharged in a bankruptcy proceeding if the divorce judgement has not been finalized
Contact our Firm
If you require experienced legal representation for a matter of Family Law, Supplemental Security Income, Medical Malpractice, Social Security Disability, or Legal Malpractice, Siragusa Law Firm is here to help. Contact our firm today to schedule a consultation so we can discuss your case.