Dealing with a family law issue? Get ready for the ride of your life if the bankruptcy law gets involved.
The breakup of a family, dealing with child support, or alimony can be a disaster for your head as well as your pocket.
Money goes out on a near-constant basis, seemingly with a mind of its own. Your lawyers and the other side’s attorneys both need to be paid for the work they perform, and everyone else ends up lighter in the wallet.
It’s no shock, then, that lots of people with family law issues find themselves with bill problems. If the family law matter goes on for too long, those bills pile up to the extent that someone may end up thinking about bankruptcy as a way to stop the wheels of the family court from spinning.
But before you try to leverage the automatic stay in bankruptcy as a way to solve some of your family law issues, here are some things you need to know.
The Automatic Stay Is Not Perfect
You know the automatic stay serves to stop collection actions once you file for bankruptcy, but it’s not all-encompassing.
In fact, there’s a laundry list of collection actions that continue in the face of a bankruptcy filing.
Filing for bankruptcy alone doesn’t help you if what you’re looking to stop isn’t covered.
Family Law Exceptions Abound
If you’re involved in a family court issue, the bankruptcy law won’t protect you with the automatic stay in most cases. Specifically, the following types of matters will continue on in the face of your bankruptcy filing:
- paternity cases;
- child or spousal support issues;
- child custody or visitation matters;
- action relating to domestic violence; and
- divorce actions.
In addition, to lawsuits and court proceedings, collection efforts in connection with past due child or spousal support won’t be stopped in a Chapter 7 bankruptcy. You can elect to file a Chapter 13 bankruptcy and provide for repayment of those debts; in that case, the automatic stay will apply.
Your bank accounts can remain frozen, your tax refund can be seized, your driver’s license can be suspended – again, unless you go into Chapter 13.
Good News If You’re Not The One Filing
If you’re locked in a heated battle in family court and the other person files for bankruptcy then you can consider yourself a winner. Either the action won’t be stayed, or the debt in dispute won’t be discharged. Either way, the news for you is good.
Proper Bankruptcy Planning Wins The Day
Lots of my clients with family law issues work with me and their family law attorney side-by-side, keeping things moving forward in an orderly fashion. It’s the only way to plan appropriately, and to protect their rights within the bounds of the bankruptcy laws.
In the end, everyone wins. Finally, a happy ending.