Divorce and Bankruptcy sometimes accompany each other.  The financial burden of a Divorce can often lead one or both partners into Bankruptcy.  Or the stress of financial difficulties can lead to a Divorce. 

Legally, these two areas often inter-relate, but sometimes clash.

The filing of Bankruptcy creates an “Automatic Stay” that puts a stop to most collection efforts, including foreclosures.  [11 U.S.C. Sec. 362(a).] 

The Automatic Stay does not apply to most aspects of family law proceedings, including proceedings:

  • for the establishment of paternity.
  • for the establishment or modification of an order for domestic support obligations (child support and alimony).
  • concerning child custody or visitation;
  • for the dissolution of a marriage, (divorce)
  • regarding domestic violence;
  • in most cases, regarding the collection of a domestic support obligations.

However, if one of the marital partners files for bankruptcy before or during a divorce, the family law court does not have authority to divide any property of the “estate,” meaning any property in which the Debtor has an interest at the time of filing.  This includes both community and separate property.

In some instances where one party to a divorce files for bankruptcy, the other can sometimes obtain Relief from Stay, meaning permission from the Bankruptcy Court to proceed in the state court.

For a free consultation regarding your rights in either a Divorce or a Bankruptcy, call (213) 509-1515 .