FAQs on Bankruptcy, Divorce, and Related Family Law Matters in Colorado Springs
One spouse may file bankruptcy on his or her own. That spouse would be able to discharge the debt. Because both spouses are responsible for the debt incurred during marriage, the creditors would then simply pursue collection for the entire debt against the non-bankrupt spouse. A divorce court may not order the spouse who has discharged the debt to pay it, and a divorce court cannot keep creditors from pursuing the non-bankrupt spouse, since the divorce court has no say over the contract between the creditor and the debtor. The divorce court only has the ability to assign debts between the two spouses. In order to prevent this situation, the non-filing spouse may wish to join in the bankruptcy case.
If bankruptcy is filed while a divorce action is pending, the financial matters of the divorce action would be stayed under the “automatic stay” provision in the bankruptcy code. This means that the divorce may not go forward until the bankruptcy case is over without permission from the bankruptcy court. Non-financial matters, such as child custody, needing to be resolved would not be stayed.
It often happens that one ex-spouse will file for bankruptcy after the divorce. However, provisions of the bankruptcy code keep the spouse from discharging in bankruptcy any obligations that are “in the nature of support.” Thus, the spouse would not be able to discharge such debts as back child support or spousal support.
Property division obligations are more open to discharge than obligations that are for support; however, if the ex-spouse objecting to discharge files that objection in the bankruptcy court and is able to show that the obligation is in the nature of support, then the debt could not be discharged.
If one spouse was ordered to pay an amount towards the other spouse’s attorney fees in a divorce or custody matter, it is likely that obligation will be considered in the nature of support and will not be dischargeable.
Divorce or bankruptcy, taken alone, create complex issues. Individuals who find themselves potentially involved in both a bankruptcy and divorce should consult an attorney who understands the intersecting issues and dynamics.
DISCLAIMER: This site and any information contained herein are intended for informational purposes only and should not be construed as legal advice. Seek competent legal counsel for advice on any legal matter.