My Spouse Filed Bankruptcy During Our Divorce. What Should I Do?

petition to file for bankruptcy papers

When going through a divorce, you may be overwhelmed by the many considerations that must be made. However, this process can become even more anxiety-inducing when you learn that your spouse is filing for bankruptcy in the middle of your divorce proceedings. As such, you’ll likely have many concerns about how this will impact your divorce. Luckily, the following blog and a Los Angeles divorce attorney can help answer the questions you may have regarding these circumstances.

How Does Bankruptcy Work?

Generally, when someone files for bankruptcy, it means they can no longer pay their debts and are seeking relief. It’s important to understand that though this process can offer a fresh start for many, it will remain on the filer’s credit report for years after, drastically impacting their credit score.

As such, their assets will be liquidated to repay as much of the owed funds during Chapter 7 bankruptcy, or they will begin a repayment plan to make monthly payments to creditors through Chapter 13. However, to qualify for Chapter 7, the filer must take a means test to see where they fall in relation to the median income for California. As such, most in California will proceed with Chapter 13 bankruptcy. The repayment plan will generally take three to five years.

How Can This Impact the Outcome of Our Divorce?

Unfortunately, due to the complexities of bankruptcy, if your spouse files during your divorce, it can cause significant delays in the proceeding and add additional complications regarding your finances.

One of the most significant impacts this will have is halting the division of marital property. This is because the filer is granted an automatic stay, meaning all collection efforts against them must stop. This is because the bankruptcy courts must assess the value of these assets and how they will be used in your spouse’s bankruptcy case. As such, your divorce may be delayed until your spouse’s bankruptcy case has been closed, which, during Chapter 13, can take up to five years.

If this happens, you’ll need to receive a court order allowing you to proceed with the divorce to settle matters like alimony or child support.

Why Should I Contact an Attorney?

Though most bankruptcy attorneys will advise their clients not to file during a divorce, if your spouse does anyway to spite you, it’s imperative to connect with an experienced attorney. Unfortunately, this will have a significant impact on your divorce proceedings and the outcome, so letting an experienced divorce attorney help you navigate this process is critical.

Working with an attorney can help you navigate this complex process, giving you the best chance at a favorable outcome. At the Zitser Family Law Group, APC, our team has experience handling divorce cases involving complex assets. As such, we can help you through your divorce. Contact us today to learn how we will fight for you.

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