Obligations under a Divorce Judgment

In a nutshell, no obligation incurred to a child or ex-spouse in a divorce is dischargeable in bankruptcy. Section 523(a)(5) of the Bankruptcy Code states that a domestic support obligation is nondischargeable. Section 523(a)(15) provides that other obligations are also nondischargeable.

Before the bankruptcy reforms enacted in 2005, the spouse seeking to have a property division obligation enforced would have to prove that enforcing the obligation would harm the spouse in bankruptcy less than he or she would be harmed by discharging the debt.

Effect on Divorce Proceedings

When a debtor files bankruptcy, the automatic stay goes into effect. This prevents any collection attempts on the debtor’s property. It also prevents a court from assigning property to another, including a spouse. In that event, the spouse who is not in bankruptcy must file a motion with the bankruptcy court to lift the automatic stay so that the divorce court can divide the marital property.

(Illustration by The-Lane-Team)

For example, we talk about family law (or divorce law), personal injury law, contract law. “Oh,” we might say, “he’s a bankruptcy lawyer,” or, “she’s an elder law attorney.” Unfortunately life, including law, is rarely that nice, neat, and organized.

No, the reality is that a case can involve several different areas of law. The one I want to focus on today is quite common, actually. It’s when the worlds of divorce and bankruptcy collide.

When one spouse, or both, are going through bankruptcy during a divorce, it can cause some special problems. This is because when a bankruptcy case is first filed, it also creates what is known as the bankruptcy estate. The estate is made up of most of the debtor’s property. Since divorce often involves the division of property, you can imagine that this may muck up the works, and to some extent, it does.

Fortunately, bankruptcy courts rarely want to get involved in divorce cases, so, if requested, they will often lift the automatic stay (The “automatic stay” is beyond the scope of this blog post, but in a nutshell, it’s the provision of the bankruptcy code that is supposed to stop all collection efforts ponce the bankruptcy is filed) and allow the divorce case to proceed.

Tim Evans is a Hattiesburg, Mississippi lawyer who handles both divorce and bankruptcy cases. If you need advice in either area, give him a call at 601-255-5085, or email Tim Evans with your question.