Divorce in Bankruptcy Court?

By February 15, 2013Divorce

On behalf of The Marks Law Firm, L.L.C. posted in Divorce on Friday, February 15, 2013

Parties to divorce often find themselves unable to sustain their livelihood and all of their court-ordered obligations. With no way out, many of these folks turn to bankruptcy.

Federal bankruptcy law offers individuals in dire financial situations a way to stop the bleeding, quiet creditors and find a way to start anew. Most people who file for bankruptcy are not poor and unemployed; rather, they are struggling because debt obligations – bad mortgages, high credit card balances, poor consumer choices, student loans – become more than monthly income can bear.

While bankruptcy does provide a path back to financial sanity, it cannot undo the work of the family court. A federal bankruptcy judge lacks the ability under federal law to discharge key family court obligations, notably child support and maintenance, and also final distributions of marital property and debt.

If bankruptcy cannot save an individual drowning in financial obligations, what can that individual do?

Every week we see individuals asking similar questions – the court ordered me to do X and I cannot afford to do so anymore. Rather than look to the bankruptcy court for relief, these individuals need to look to the family court instead.

For example, if you have suffered a sudden loss of employment and have been unable to secure any employment, let alone comparable employment, and you have child support and maintenance obligations, the sooner you can return to the family court the better – the longer the delay, the longer you become in arrears, which could subject you to interest charges, contempt proceedings and attorney’s fees for your former spouse. Bankruptcy will not discharge these obligations – but the family court can modify your judgment of dissolution to reduce or suspend payments at least until your employment returns to a sustainable level. Importantly, the court will not reward voluntary reductions in employment or income – you must show a good faith effort in seeking employment and meeting your obligations.

If you find yourself in a similar situation, do not run to the federal bankruptcy court – contact us, we can help.