Posts Tagged ‘divorce process’

Can Filing For Bankruptcy Impact The Divorce Process?

Monday, December 21st, 2015

If your divorce is still on process, then declaring bankruptcy may not directly influence the settlement talks to decide custody or support. However, it will halt the current divorce proceedings that are relevant to the division of property for the time being, until that matter is settled.

Because declaring for bankruptcy means your property is now subject to administering by the bankruptcy court, there is an indefinite stay, or hold, with the proceedings that relate in any way to the division of property proceedings. There are two different types of bankruptcy that will come into play with the courts; Chapter 7 and 13. In 7, the power and control is in the hands of the trustees to liquidate your nonexempt property in order to pay your debt. So if you declare bankruptcy during divorce, you may lose control of any assets you have, as they can be declared as being owned state or be payment to collectors. When your ex-spouse owns a joint property, the trustee could be allowed to clear the whole asset if you cannot release the total of your interest in said property.

In addition, if they find that your ex’s financial interest in said property is separate from your own bankruptcy estate, your ex would receive the exact value of their personal interest from the profits. Meanwhile, 13 does not give power to the trustee. But, depending on how much nonexempt property you still owe, it may affect the amount you must pay unsafe creditors via your final repayment plan. It gives the power of determining the total value of interests to the trustee, so both have advantages and disadvantages.

However, filing for bankruptcy does not affect, stall or impact proceedings that have to do with establishing support payments or custody at all. So, when attempting to stall those types of proceedings, filing for bankruptcy will not help you.