My Ex Filed Bankruptcy! What Now? Part 2
Just when you thought you were done with the divorce, and life was well on its way to settling into a new normal, you learned that your ex-spouse has filed a bankruptcy case. You wonder, what fresh hell is this?
In a previous post, click here for Part 1, we learned some basics of bankruptcy, and we also learned about the types of debt that come out of a marital property agreement. In this post, we will consider how bankruptcy affects these obligations and what you can do to protect your rights. Realize that this is in no way intended to provide you legal advice. We can only give you broad brush strokes and general information. To ensure that you’re taking the right kind of action for your specific set of facts, you need expert guidance. Therefore, instead of fretting, your first and best action will be to . . .
Find a Good Attorney
The divorce attorney who handled your case is the best place to start. Divorce attorneys see these types of issues regularly. You can also contact a qualified consumer bankruptcy attorney. Before you meet with either, arm yourself with some information about how bankruptcy works and how domestic support obligations and property settlements are treated in a bankruptcy case.
What Happens in a Chapter 7 Straight Bankruptcy?
We know that the discharge, or forgiveness of debt, depends on the type of bankruptcy the ex filed. Your best case scenario is a Chapter 7 straight bankruptcy. In a Chapter 7, none of the three obligations (child support and alimony, property division, and hold harmless agreements) will be discharged. That means, your ex will still be responsible for all of those after the bankruptcy is over.
Here’s where having your own attorney will serve you well. Even though the debts will survive the bankruptcy, it may still be in your best interest to file a claim in the case. Most Chapter 7 bankruptcy cases are straightforward and simple. The debtor files the case and four to six months later receives a discharge order. Some cases can be more complicated. If the debtor has more property that he needs to get a fresh start, he may have to turn the excess over to the court to sell. The proceeds will be distributed to creditors. To get a piece of that action, the creditor has to file a claim with the court. Although you are not required to have an attorney before you can file a claim, you may find the process confusing. Here is a link to the claim form(you many click on the link or cut and paste into your browser:.
Dealing with Chapter 13 Repayment Plans
If your ex filed a Chapter 13 case, you may not fare as well. Domestic support obligations like child support and alimony are discharged in a Chapter 13. In fact, if your ex-spouse is behind on child support or alimony when he files, he will have to be completely caught up when his payment plan is completed three to five years. This works well for you if your ex has amassed a large support obligation.
Unfortunately, the two other types of debt, those arising out of property divisions and hold harmless agreements are often discharged in a Chapter 13 case. But even so, you are not without recourse. This is why it is so important that you consult a knowledgeable attorney. For instance, your attorney may be able to argue to the bankruptcy court that the property division was actually intended to be a form of alimony, which can survive even a Chapter 13 repayment plan case. She can also advise you whether filing a claim in the Chapter 13 case will net you any money or help you preserve other rights.
How Your Certified Divorce Coach Can Help
Although your certified divorce coach cannot give you legal advice, your coach can help you find resources to learn more about issues that arise out of your case. Your coach can even help you find a knowledgeable and qualified attorney, accountant or financial planner who can represent your interests and advise you on the best course of action. We know our experts! To learn more about this and other ways a certified divorce coach, just like Carron, can help you, click here or check out our services here and get started on the path to surviving your divorce and thriving in its aftermath.
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Carron Nicks is a Certified Divorce Coach with Divorce Response Team and Licensed Attorney. She holds a Bachelor’s degree with a major in psychology, and a Master’s degree in counseling from the University of South Alabama. She received her J.D. from Tulane Law School in New Orleans, where she was Articles Editor for the Tulane Law Review.
Divorce Response Team 2017 www.divorceresponseteam.com