Separated, but Divorcing Debtors
Filing together before divorce
Some married couples choose to file a joint petition of bankruptcy before they divorce. Using one attorney to file a joint petition may be possible, but there is a potential conflict of interest. In some circumstances, provided the parties agree (and represented by separate divorce attorneys), the conflict may be waivable. Some conflicts are not waivable, though, and each person may need to file bankruptcy separately and hire separate attorneys.
One spouse files bankruptcy
If one spouse chooses to file bankruptcy, this is permitted. The filing of bankruptcy usually results in the imposition of the automatic stay. In some circumstances, the stay may need to be lifted before proceeding with a divorce. For example, if the family court needs to divide non-exempt property when one of the parties is in Chapter 13 bankruptcy, a motion to lift the stay may be needed. The Bankruptcy Court Judge may need to approve the division of property.
Effect of bankruptcy on child support or spousal support
Bankruptcy does not eliminate past due domestic support obligations (with a very narrow exception of a Chapter 13, where child support has been assigned to a governmental unit). Chapter 13 bankruptcy can usually be used to catch up on past-due child support. One of the requirements for obtaining a discharge is that the debtor makes all payments after the bankruptcy is filed. If support payments have been ordered, future support payments are not affected by filing bankruptcy. Ongoing support payments are a deduction in the budget, as well as the means test.
Effect of bankruptcy on property distribution or orders to pay debt
The impact of bankruptcy on property settlement distributions and orders to pay debt is complex and very fact-specific. Consulting with a knowledgeable bankruptcy attorney can help you learn more.