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Here’s When Bankruptcy Will Stop a Family Court Case

Money problems are the biggest cause of divorce, but bankruptcy don’t have to put the brakes on the process.

If you decided to split before you filed for bankruptcy, your juggling a mess of legal issues at an emotional time.

Not only are you dealing with your finances, you’ve also got to contend with court cases surrounding issues such as paternity, custody, child support, and maybe even domestic violence.

After awhile, most people just want to get it over with. But when you find out about the automatic stay in bankruptcy, you’re thinking that it’s all going to stop while you resolve your bill problems.

Not so.

The Automatic Stay May Not Apply

Though the automatic stay goes into effect with respect to most kinds of legal action, it doesn’t apply to the following types of cases:

  • paternity;
  • establishment or modification of an order for domestic support obligations;
  • child custody or visitation;
  • divorce, except to the extent that such proceeding seeks to determine the division of property that is property of the estate;
  • domestic violence; and
  • collection of past due domestic support obligations.

If you’re past due on child support payments, it’s still going to be reported to the credit reporting agencies. And your tax refund can still be intercepted.

A Possible Exception

The automatic stay doesn’t prevent collection of past due alimony or child support from any property unless that property belongs to the bankruptcy estate.

If you’re in a Chapter 13 bankruptcy – the kind of bankruptcy that allows you to repay your debts over time – then your wages may technically be considered property of the bankruptcy estate. If so, any wage garnishment for collection of past due alimony or child support stops when your bankruptcy case is filed.

Your Chapter 13 repayment plan is going to need to provide for payment in full over those past due alimony and child support payments, but if it does then you could get some time to use the process as a way of catching up with those old debts.

Settle Your Marital Situation While Dealing With The Debts

If your family life is disintegrating, who’s more important – you or the kids?

If it takes more than a split second to come up with the answer, you got it wrong.

The law understands that the family court may be unfair, but that’s your battle to take up in that court – not here in bankruptcy.

The automatic stay exists to protect you from evil creditors and to help balance the interests of each creditor against one another, but it’s not there to shield you from your ex.

Focus Your Attention

Some people come to me hoping that they can get the benefit of the automatic stay with respect to the family law issues.

They need some time to get things in order so they can battle the family-related issues more effectively.

But the bankruptcy court judge isn’t the right person to handle those issues. He or she likely doesn’t understand most of what you’re arguing about, and wouldn’t be the best person to decide those issues.

When you’re in bankruptcy court you can focus on your other bill problems and work towards a way out. In doing so, you may end up better equipped to handle the family law issues.

The debt shouldn’t clutter your brain when you’ve got family matters to resolve. Thankfully, bankruptcy can help you focus on what’s important.

 

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By |August 19th, 2011|

About the Author:

I've been a consumer protection lawyer since 1995, working to help people end their bill problems. I'm a faculty member at the Student Loan Law Workshop, a nationally recognized speaker, and a long-time member of both the National Association of Consumer Bankruptcy Attorneys and National Association of Consumer Advocates.
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