Bankruptcy Issues in Divorce Cases

Bankruptcy Issues in Divorce Cases

Published on November 26, 2012 by: Ian M. Falcone

This article is intended for family law professionals.

           One of the most common questions I get from divorce attorneys is “What happens if my client’s spouse files bankruptcy?  Are they protected?”  Not surprisingly, the answer is, it depends.

            When the Bankruptcy Code was amended in 2005 (BAPCPA) there were several changes.  The first relevant change was the addition of a defined term:  Domestic Support Obligation.  11 U.S.C. 101(14A) states that a Domestic Support Obligation is a

         “debt that accrues before, on, or after the date of the [bankruptcy filing]...., including interest that accrues on that debt as provided under applicable nonbankruptcy law notwithstanding any other provision [of the Bankruptcy Code], that is

        (A) owed to or recoverable by –

i.        A spouse, former spouse, or child of the debtor or such child’s parent, legal guardian or responsible relative; or

                   ii.      a governmental unit;

(B) in the nature of alimony, maintenance, or support (including assistance provided by a governmental unit) of such spouse, former spouse, or child of the debtor or such child's parent, without regard to whether such debt is expressly so designated,

(C) established or subject to establishment before, on, or after the [Bankruptcy filing] ..., by reason of applicable provisions of-

(i)      a separation agreement, divorce decree, or property settlement agreement

(ii)     an order of a court of record; or

(iii)    a determination made in accordance with applicable nonbankruptcy law by a governmental unit; and

(D) not assigned to a nongovernmental entity, unless that obligation is assigned voluntarily by the spouse, former spouse, child of the debtor, or such child's parent, legal guardian, or responsible relative for the purpose of collecting the debt.”

This definition encompasses the previous concept of “in the nature of alimony, maintenance or support”, but also broadens the concept to apparently protect any person caring for a child.  

What makes an obligation “in the nature of alimony, maintenance or support”?

         There are many factors that the Court will look to when determining whether the debt is a DSO.  These include, but are not limited to:

1.          The intent of the parties.

2.          Whether the obligation under consideration is subject to contingencies, such as death or remarriage.

3.          Whether the payment was fashioned in order to balance disparate incomes of the parties.

4.          Whether the obligation is payable in installments or a lump sum.

5.          Whether there are minor children involved in a marriage requiring support.

6.          The respective physical health of the spouse and the level of education.

7.          Whether, in fact, there was a need for spousal support at the time of the circumstances of the particular.

8.          The tax treatment of the obligation.

         See, e.g. In re Robinson, 193 B.R. 367 (Bankr. N.D.Ga. 1996); In re MacDonald, 194 B.R. 83 (Bankr. N.D.Ga. 1996); Ackley v. Ackley (In re Ackley), 186 B.R. 1005 (Bankr. N.D.Ga. 1995); rev'd, 187 B.R. 24 (N.D.Ga. 1995); Nix v. Nix (In re Nix), 185 B.R. 929 (Bankr. N.D.Ga. 1994); Myers v. Myers (In re Myers), 61 B.R. 891 (Bankr. N.D.Ga. 1986); and In re Edwards, 33 B.R. 944, 946 (Bankr. N.D.Ga. 1983).

         Labels can be helpful, but the Court is not bound by the labels supplied.  In short, it is the totality of the circumstances that will best guide the Court.

When are DSOs dischargeable?

Never. 11 U.S.C. 523(a)(5) states:

(a) A discharge under section 727, 1141, 1228(a), 1228(b), or 1328(b) of this title [11 USCS § 727, 1141, 1228(a), 1228(b), or 1328(b)] does not discharge an individual debtor from any debt--

(5)  for a domestic support obligation

The Code sections cited within the statute refer to discharges under Chapter 7, 11 and 13.  Thus, DSOs are never dischargeable under any chapter of bankruptcy. 

However, past due obligations can be restructured through the use of Chapter 13 and, to a lesser extent, Chapter 11.  In a Chapter 13 case, all pre-petition arrearages can be repaid over a period not to exceed 5 years.  In Chapter 11 cases, possibly because of a “quirk” in the Code, all pre-petition arrearages must be paid upon the “effective date” of the plan.  The Code does not define “effective date” and recently a local attorney attempted to define the effective date as five years after payments started.  Unfortunately, the case was dismissed for other reasons.  (See In re Hugh David Coherd  12-60285-jrs NDGA).

What about “property settlements”?

Under pre-BAPCPA law, obligations contained in divorce settlements fell into one of two categories:  “in the nature of alimony, maintenance or support” (now covered as DSOs) and “property settlements”.  Generally speaking, the rule of thumb was that a property settlement obligation could be discharged after applying a balancing test.  BAPCA changed that analysis tremendously.

Now, 11 U.S.C. 523(a)(15) reads:

(a) A discharge under section 727, 1141, 1228(a), 1228(b), or 1328(b) of this title [11 USCS § 727, 1141, 1228(a), 1228(b), or 1328(b)] does not discharge an individual debtor from any debt--

(15)  to a spouse, former spouse, or child of the debtor and not of the kind described in paragraph (5) that is incurred by the debtor in the course of a divorce or separation or in connection with a separation agreement, divorce decree or other order of a court of record, or a determination made in accordance with State or territorial law by a governmental unit;

The definition now includes virtually all obligations incurred “in connection with” a divorce or related action.[1]  Courts have held that obligations arising in subsequent modification and contempt actions, such as attorneys fees, are covered by this section. 

This expansive definition would seem to indicate that “property settlement” debt, like their DSO cousins, cannot be discharged.  Despite the statutory language, this is not the case.  Property settlement debt cannot be discharged in a Chapter 7 or Chapter 11 case.  However, Chapter 13 contains some addition language.  11 U.S.C. 1328(a)(2) states

(a)   Subject to subsection (d), as soon as practicable after completion by the debtor of all payments under the plan, and in the case of a debtor who is required by a judicial or administrative order, or by statute, to pay a domestic support obligation, after such debtor certifies that all amounts payable under such order or such statute that are due on or before the date of the certification (including amounts due before the petition was filed, but only to the extent provided for by the plan) have been paid, unless the court approves a written waiver of discharge executed by the debtor after the order for relief under this chapter [11 USCS §§ 1301 et seq.], the court shall grant the debtor a discharge of all debts provided for by the plan or disallowed under section 502 of this title [11 USCS § 502], except any debt--

(2 )  of the kind specified in section 507(a)(8)(C) [11 USCS § 507(a)(8)(C)] or in paragraph (1)(B), (1)(C), (2), (3), (4), (5), (8), or (9) of section 523(a) [11 USCS § 523(a)];

What this convoluted statute says is, that upon completion of a debtor’s Chapter 13 plan, any unpaid obligation for property settlement debts are discharged.  The amount of repayment is based on several factors, including the debtor “liquidation value” the amount available to pay into the plan, and the length of the plan.[2] 

What do you need to do as a family law attorney?

It is unlikely that you will know that your client’s spouse plans to file for bankruptcy protection in the future.  So, all you can do is try and protect your client.  Clearly, DSOs enjoy more protection than mere property settlements.  If you can, try and weigh the agreement towards this side of the spectrum.  That does not mean that you should try to call every obligation a DSO.  Remember, it’s not the label that defines the treatment, it’s the intent and totality of the circumstances. 

If alimony is warranted, be sure to include it in a separate section.  Be sure to cite financial circumstances that justify the award of alimony.  This does  not need to be particularly details.  A statement as simple as “due to the income disparity of the parties and a their relative financial positions, the following is awarded as alimony . . .”

Also, be sure to include hold harmless clauses in your agreement.  If the debt is jointly held and wife will be obligated to pay the debt, be sure the agreement states that she will hold husband harmless for any and all damages that arise from her failure to pay (or similar language).

Adversary Proceedings

One of the effects of BAPCPA has been the reduction of litigation in the bankruptcy courts over whether a divorce related debt is dischargeable.  If something is clearly a DSO, no action is required to have it declared non-dischargeable.  Unfortunately, however, a standard discharge order effectively says “those debts which are properly dischargeable are hereby discharged.”  There is no breakdown in the Court’s order stating which debts are included in the discharge and which are not.  Does that mean a client needs to take action when their ex-husband files a bankruptcy case?

Obviously, it is always best to consult with a bankruptcy lawyer to be safe.  However, unlike pre-BAPCPA times, where an adversary proceeding (litigation inside the bankruptcy court) was required to first determine whether the debt was a DSO or property settlement, and then, if found to be a dischargeable property settlement obligation, in the Chapter 7 scenario, at least, action is typically not really required. It won’t matter whether the debt is a DSO or property settlement if the case is Chapter 7 because neither is dischargeable.

In a Chapter 13 case, it may be advisable to file an adversary proceeding to determine whether the debt is a DSO or property settlement.  If the debtor treats the debt as a property settlement and no one objects, and the debtor completes the case, that obligation may be discharged.

If you are faced with a Chapter 11 filing, always seek the advice of an experienced bankruptcy attorney.  These cases are far more complicated than Chapter 7 and Chapter 13 and require far more involvement by an attorney.

Summary

The intersection of bankruptcy and family law is complicated at best, but the following 5 items will be helpful to remember:

1.              DSOs are never dischargeable under any bankruptcy chapter.

2.              BAPCPA expanded the definition of “property settlement” to include almost any obligation contained in connection with a divorce.

3.              “Property settlements” can be discharged in a completed Chapter 13 case.

4.              The difference between a DSO and Property Settlement is not a label

5.              Adversary proceedings are not always required but should be discussed.

---

[1] Although most attorneys still refer to these obligations as “property settlement” debts, they might better be referred to as “non DSO obligations” or “other” debts. so as to include the expanded obligations. 

[2] It is possible to confirm  plan that does not pay any of the property settlement debt.  Such a plan would have to otherwise comply with all requirements of the Bankruptcy Code.  Such a circumstance is uncommon and the explanation for how it would arise is beyond the scope of this article.

Does Bankruptcy Affect My Employment Opportunities?

DOES BANKRUPTCY AFFECT MY EMPLOYMENT OPPORTUNITIES?

Published on November 1, 2012 by: Ian M. Falcone

I am asked this question more and more these days.  In a market with fewer job opportunities and numerous applicants, no one wants to hurt their chances of getting a job.  So, can an employer legally discriminate against you if you have filed bankruptcy?  The answer differs depending on whether the employer is a private (non-government) or public (government) company. 

Not surprisingly, there are more restrictions placed on government employers.  Section 525(a) of the Bankruptcy Code states:

... a governmental unit may not deny, revoke, suspend, or refuse to renew a license, permit, charter, franchise, or other similar grant to, condition such a grant to, discriminate with respect to such a grant against, deny employment to, terminate the employment of, or discriminate with respect to employment against, a person ... solely because such bankrupt or debtor is or has been a debtor under this title ...

                                 See Section 525 of the Bankruptcy Code

There are two important aspects of this Code Section.  First, the phrase “deny employment to” clearly prevents a government employer from refusing to hire an applicant because he or she has filed a bankruptcy case in the past.  More importantly, a governmental unit may not “terminate the employment” of a person that has previously filed for bankruptcy protection.
Private employers are very different.  Section 525(b), applicable to non-governmental employers states as follows:

(b) No private employer may terminate the employment of, or discriminate with respect to employment against, an individual who is or has been a debtor under this title, a debtor or bankrupt under the Bankruptcy Act, or an individual associated with such debtor or bankrupt, solely because such debtor or bankrupt--

(1) is or has been a debtor under this title or a debtor or bankrupt under the Bankruptcy Act;

(2) has been insolvent before the commencement of a case under this title or during the case but before the grant or denial of a discharge; or

(3) has not paid a debt that is dischargeable in a case under this title or that was discharged under the Bankruptcy Act.

Congress had originally considered including the same prohibitions for private employers as the Code includes for governmental employers.  See Bankruptcy Commission, S. 236, 94th Cong., 1st Sess. § 4-508 (1975)  However, that language was not included.  As a result, although private employers cannot “terminate the employment” of an individual that has filed a bankruptcy case, it does appear that they can deny an applicant a position based on a bankruptcy filing.

This situation was recently addressed by the Court of Appeals for the 11^th Circuit (serving FL, GA and AL).  In Myers v. Toojay’s Mgmt. Corp., 640 F. 3d 1278 (11^th Cir., 2011) (click here for a .pdf of the opinion) a job applicant was offered a position and given a two-day “on-the-job” evaluation.  During that two-day period, the employer conducted a background check and discovered the applicant’s bankruptcy filing.  The job offer was rescinded (although the employee was paid for the two days of “on-the-job” evaluation).  The Court examined the Code and determined that the employers actions were proper. 

It is important to note that both Section 525(a) and Section 525(b) include the language “solely because” in its prohibitions.  Thus, an employer, private or public, may be able to prohibit hiring, and in the case of governmental employers, terminate employees if there are reasons to discriminate other than the bankruptcy filing (An example might be a Chief Financial Officer who files a bankruptcy case.  A CFO’s position is to be responsible for the financial health of a company.  It may be inappropriate to allow that individual to hold such a trusted position) .

In summary, no employer can terminate your employment solely because you filed a bankruptcy case.  However, a private employer may choose not to hire you because you filed for bankruptcy protection.  Of course, that same employer could reach the same conclusion based on your bad credit alone.

Student Loans: Are the dischargeable?

Student Loans: Are they dischargeable?

Published on September 6, 2012 by: Ian M. Falcone

It seems that every week or so, I get a question regarding student loan debt. So, I figured I would do my best to answer the question: are they dischargeable? The technical answer is “yes”, but the reality is that the discharge is rare.

History

Prior to 1998, if a student loan had been in repayment for seven (7) years, the debt was dischargeable. However, on October 7, 1998, the Bankruptcy Code was amended to make federally issued or guaranteed loans non-dischargeable unless the debtor could prove an “undue hardship.” Private student loans, however, remained eligible for discharge.

Today

On October 17, 2005, the Bankruptcy Code was amended again and substantially altered the student loan landscape. Now, not only were federally insured loans non-dischargeable unless a debtor could prove an “undue hardship” but now private loans follow the same rules. In fact, there is even concern that using a credit card to pay off a student loan could prevent discharge of that portion of the credit card debt.

The “Undue Hardship” Standard

The seminal case for determining whether a debtor can discharge student loans is In re:

• Brunner, 831 F.2d 395 (1982) (adopted by the 11^th Circuit in Hemar Inc. Corp of Am. V. Cox, 338 F.3d 1238 (11^th Cir. 2003)). Under Brunner the burden is placed on the debtor to prove each of the following:
• that the debtor cannot maintain, based on current income and expenses, a "minimal" standard of living for herself and her dependents if forced to repay the loans;
• that additional circumstances exist indicating that this state of affairs is likely to persist for a significant portion of the repayment period of the student loans; and
• that the debtor has made good faith efforts to repay the loan.

 

Undue Hardship: The Minimal Standard of Living Factor

In determining whether the debtor can maintain a minimal standard of living, the Court must examine the debtor and her spouse's earnings to evaluate the quality of the debtor's lifestyle. See id. at 509. Debtors cannot satisfy the test "merely because repayment would require some major personal or financial sacrifices." Elmore v. Massachusetts Higher Educ. Assistance Corp. (In re Elmore), 230 B.R. 22, 26 (Bankr. D. Conn. 1999). Thus, the debtor must prove that she cannot afford the basic living necessities if forced to repay the loan. SeeIvory v. United States (In re Ivory), 269 B.R. 890, 899 (Bankr. N.D. Ala. 2001) Rutherford v. William D. Ford Direct Loan Program (In re Rutherford), 317 B.R. 865, 878 (Bankr. N.D. Ala. 2004) (opining that the "minimal standard of living" relates to the smallest degree of income necessary to cover all expenses essential for daily existence).

The Bankruptcy Court for the Northern District of Alabama identified six factors that it deemed necessary for a minimal standard of living in America, including shelter, basic utilities, food and personal hygiene products, vehicles and the costs associated with a vehicle, health insurance, and some source of recreation. Ivory v. United States (In re Ivory), 269 B.R. 890, 899 (Bankr. N.D. Ala. 2001).

The Bankruptcy Court for the Middle District of Georgia utilized these factors in its analysis of a student loan dischargeability filing and prior to its analysis of the facts, added: "[T]he Court must apply its common sense knowledge gained from ordinary observations in daily life and general experience to determine whether Debtor's expenses are reasonable and necessary. If Debtor expends funds for items not necessary for the maintenance of a minimal standard of living or if Debtor expends too much for an item that is needed to maintain that minimal standard of living, then it is unlikely that, given Debtor's present circumstances, the first prong of the Brunner test is satisfied where such overpayment would permit Debtor to cover the expense of her student loan debt without sacrificing a minimal standard of living . . . ." Douglas v. Educ. Credit Mgmt. Corp. (In re Douglas), 366 B.R. 241, 253-54 (Bankr. M.D. Ga. 2007

Undue Hardship: Additional Circumstances

The second prong of the Brunner test requires a debtor to prove that additional circumstances exist indicating that she cannot maintain a minimal standard of living for a significant portion of the repayment period if the loans are not discharged. A debtor must show "a total incapacity . . . in the future to pay [her] debts for reasons not within her control." In re Mallinckrodt, 274 B.R. 560, 566-67 (S.D. Fla. 2002)(quoting Brightful v. Pa. Higher Educ. Assistance Agency (In re Brightful), 267 F.3d 324, 328 (3d Cir. 2001). Further, satisfaction of the second prong should be based on a "certainty of hopelessness." In re Douglas, 366 B.R. 241, 256 (Bankr. M.D. Ga. 2007) see also Downey v. Sallie Mae, Inc. (In re Downey), 255 B.R. 72, 76-77 (Bankr. N.D. Fla. 2000).

Undue Hardship: Good Faith Efforts

Under the third and final prong of the Brunner test, a debtor must act in good faith to repay the loan. The good faith analysis requires the Court to consider the debtor's efforts to obtain employment, maximize income, and minimize expenses. Educ. Credit Mgmt. Corp. v. Frushour (In re Frushour), 433 F.3d 393, 402 (4th Cir. 2005). Furthermore, "the debtor may not willfully or negligently cause [her] own default, but rather [her] condition must result from 'factors beyond [her] reasonable control.'" In re Roberson, 999 F.2d 1132, 1137 (7th Cir. 1993). Whether the debtor has made or attempted to make payments is not itself dispositive, but the Court should evaluate the debtor's conduct in the broader context of her entire financial picture. Nary v. Complete Source (In re Nary), 253 B.R. 752, 768 (N.D. Tex. 2000)

Conclusion

In a recent New York case, the Judge determined that a 64 year-old frugal woman who worked on an assembly line earning $11 per hour and had received a layoff notice was entitled to a discharge. Bene v. Educ. Credit Mgmt. Corp (In re Bene), 2012 Bankr. LEXIS 2914. In reaching its conclusion, the Court took notice of the fact that the debtor had obtained the loan in 1981, had never completed her education (she left school to care for her sick parents), had completed a five (5) year Chapter 13 case in which she partially paid the student loan, owed $56,000 against an original loan amount of $17,000 and that even under the William D. Ford Program that attempts to assist with loan repayment, the debtor would need to pay the debt for an additional 25 years until she reached age 89 and had no prospects of income, other than social security.

Clearly, it is not easy to discharge student loans.

TAXES: Are they dischargeable in bankruptcy?

TAXES:  Are they dischargeable in bankruptcy?

Published on July 21, 2012 by: Ian M. Falcone

Often, I am asked whether tax debts are dischargeable in bankruptcy.  The short answer, as almost always is the case, is, it depends.  In order to make a determination, we need to know whether we are talking about trust taxes or income taxes.

Trust taxes are those taxes collected on behalf of a another party.  The two most common examples are sales taxes and payroll withholding taxes.  When you pay for an item in the store, you pay sales tax at the cash register.  The business is collecting the tax from you and holding it in trust to pay the taxing authority. 

Withholding taxes are the taxes that an employer withholds from your paycheck. It is important to note that there are actually two components to ­­­payroll taxes.  There is the portion the employer withholds and an equal payment that is matched by the employer.  Only the portion withheld from the employee’s paycheck is a trust taxes.

The person responsible for paying the taxes and failing to do so is personally responsible for the debt.  In a very small business, this is typically the owners.  In a larger business, it can be the treasurer, CFO or someone with similar duties.

Trust taxes are unfortunately, never dischargeable.  Income taxes, however, can be.

Income taxes follow a very convoluted rule.  They must be taxes that became due more than three (3) years prior to the filing of the bankruptcy petition, an actual tax return must have been filed more than two years prior to the filing of the petition, and they must have been assessed more than 240 days prior to the petition date.

The 3-year rule works as follows:  first, determine which tax year is at issue.  Second determine what date those taxes were due, including extensions.  Third, look at a calendar for the current date.  So, if the taxes were due for the 2008 tax year and no extensions were filed and it is July 21, 2012, the taxes would meet the 3-year rule.  To say it another way, as you sit there on July 21, 2012, those taxes were due on April 15, 2009 (2008 taxes are due in 2009) which is more than 3 years prior to the filing date.  However, if you asked the same question on April 14, 2012, those taxes did not meet the 3 year rule.  As you can imagine, filing an extension changes the due date and the calculation become that much more difficult.

Assuming the taxes meet the first prong of the test, we next turn to whether the return was filed more than two years ago.  Under old law, the IRS could file a return for you (known as a “substitution for return’) and you could calculate time using that date.  Under recent law, the debtor must have filed an actual return at least two years prior to the date of the bankruptcy petition.  If the tax return was never filed, the two year period never starts to run.  So, returning to the above example, if the debtor never filed the return, meeting the 3-year portion of the test doesn’t help, because the second prong can never be met.  But, what if the debtor filed his return on July 10, 2010?  Here he meets both the first and second prong of the test.  The return was due more than 3 years prior to the bankruptcy filing and an actual return was filed more than 2 years ago.

Finally, if both the 3-year and 2-year prongs are met, we next turn to whether the taxes were “assessed” more than 240 days prior to filing the petition.  “Assessed” is a term at the IRS meaning the date it is entered in their system.  It is not the date the tax return was filed.  The only way to truly determine the assessment date is to contact the IRS and obtain a tax transcript with that information.  Audits, challenges, offers in compromise and other actions can extend the date of assessment.

Finally, as a general rule, if the underlying tax is not dischargeable, then the associated penalties and interest are not dischargeable either,  However, this is only a basic rule.  Further, if a tax lien has been filed, a new layer of complexity is added, but that is for another day.

As you can see, these rules are complicated and not as easy to understand as one might hope.  If you have tax debt and want to try and discharge it, you should discuss the matter with a more experienced bankruptcy attorney that has familiarity with business and tax issues.

Divorce and Personal Bankruptcy

BANKRUPTCY AND DIVORCE: 

Which comes first?

Published on June 12, 2012 by: Ian M. Falcone

Bankruptcy and divorce cases are often intermingled.  Whether it is the divorce process that leads to the bankruptcy or the bankruptcy filing that leads to divorce is irrelevant.  The fact remains, that we are contacted on a regular basis to address “Which comes first, the divorce or the bankruptcy case?”  The short answer, as almost always is the answer, is, it depends.

There are times when, after full disclosure and waiver of potential conflicts of interest, it makes sense for the parties to file Chapter 7 together before the divorce is completed (a joint Chapter 13 case which obligates the parties to make payments over a 3 or 5-year period is not practical if the parties plan to divorce).  These are typically the cases where the debt is preventing the divorce (i.e. neither party can afford to pay the debts but if they could both walk away from their obligations, the divorce could be fairly easily resolved).  In these cases, the parties and the attorneys must be sure that no conflict exists.  The bankruptcy attorney cannot address what is best for either individual.  In fact, if these concerns arise, the individuals need to seek independent counsel. 

Chapter 7 (liquidation) debtors are “means test” limited by income and family size (these limitations are adjusted by state and county).  If the parties are married, or sometimes just living together, their combined incomes may be used in the eligibility calculations.  This can prevent a married couple from qualifying for chapter 7.

However, after the divorce, certain obligations incurred during the divorce can be helpful.  Assume that the husband is obligated, after the divorce case is completed, to pay child support and alimony.  These obligations are legitimate deductions from income when examining Chapter 7 eligibility under the means test.  Thus, oddly, an individual with a higher income that would not qualify for Chapter 7 bankruptcy when he was married, could become eligible for Chapter 7 after the divorce because of his child support and alimony obligations.  Incurring these debts solely for the purpose of passing the means test is improper.  However, if these debts are likely to be incurred and are helpful in the long run, an individual might benefit from agreeing to these obligations.

Another issue that often arises in our office is the “joint debt” problem.  Let’s assume that the husband and wife are jointly indebted on the mortgage.  In the divorce decree, the Court could determine that the Husband is responsible for the mortgage payments.  While the Husband could file bankruptcy and eliminate his obligation to the bank, he would still be obligated to his ex-wife for the same debt (divorce related debts are no longer dischargeable in Chapter 7 cases).  Let me say that another way, if there is joint debt and you are obligated to pay it in the divorce decree, filing a bankruptcy case may not get rid of the debt.  Anytime there is joint debt, the situation becomes more complicated and an experienced bankruptcy attorney, familiar with divorce issues, should be consulted.

Finally, the filing of a bankruptcy petition creates an automatic stay.  Although the stay does not prevent the parties from obtaining a divorce, it does prevent the division of assets.  Thus, as a practical matter, the bankruptcy stops the divorce and it may be necessary to obtain an order from the bankruptcy court before continuing with the divorce.

Divorce and personal bankruptcy can each be complicated, however the combination is almost certain to create a very complex matter. Because every situation is unique, the only way to accurately determine your options, opportunities and risks is to consult with an attorney who is experienced in complicated divorce and bankruptcy cases. The legal team at the Falcone Law Firm has extensive experience in divorce, bankruptcy and small business law. If you need answers, call 770-426-9359 to arrange for a consultation with an attorney.