Bankruptcy and Divorce In Connecticut

 

Sometimes, the economic strain of one household becoming two necessitates a bankruptcy filing for one or both spouses. Bankruptcy may also be a planning tool which allows divorcing spouses to divide their property and allocate their income to their best advantage. The timing of the bankruptcy and divorce actions may be important. In these situations, there is an interaction between divorce law and bankruptcy law.

The Effect of the Automatic Stay in Bankruptcy on Divorce Actions

The automatic stay in bankruptcy does not stop the filing of a divorce action nor the ability of the state court to enter orders concerning child custody, visitation and alimony. While the bankruptcy case is pending, however, the state court cannot enter orders dividing property. It is often possible, however, to obtain an order from the bankruptcy court which allows the state court to do this.

Most Obligations Incident to a Divorce Are Not Discharged in Chapter 7 Bankruptcy

In 2005, Congress enacted the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 (BAPCPA), the most comprehensive reform of the bankruptcy laws in over a century. Prior to BAPCPA, obligations in the nature of alimony, maintenance and support were not dischargeable in bankruptcy, but if an obligation was purely a property settlement incident to a divorce, that could be discharged. However, BAPCPA broadened the scope of debts incurred in a matrimonial action that cannot be discharged.

Under BAPCPA, all obligations to a spouse, former spouse, or child of the debtor incurred in the course of a divorce or separation or in connection with a separation agreement or a divorce decree are not dischargeable in a Chapter 7 case. This includes obligations to the former spouse under a hold harmless agreement, a common device in which one spouse agrees to be responsible for certain debts of the other.

However, because a Chapter 13 discharge is broader than a Chapter 7 discharge, obligations concerning property division and hold harmless obligations can still be discharged in a Chapter 13 bankruptcy, at the completion of the Chapter 13 plan. This will probably require at least a partial payment on these obligations through the plan, though.

Contact Lawyer Edward P. Jurkiewicz Today

If you would like to learn more about our firm, please contact our office. We offer a free initial consultation to discuss your situation. With offices in Hartford, Avon and Torrington, we represent clients throughout Connecticut, including the Greater Hartford metropolitan area, and the Farmington Valley and Litchfield County areas.

Hartford area bankruptcy attorney and divorce lawyer Edward P. Jurkiewicz has over 20 years of experience representing clients. Our firm represents debtors and creditors and handles both relatively simple divorces and bankruptcies and more complex litigation matters. With this depth of experience, our firm is able to anticipate and prepare for any potential issues that could arise in your bankruptcy, divorce or family matter.

CONTACT US TODAY AT 860-299-6263

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