Going through a divorce can be an overwhelming experience in some cases. In those circumstances, the last thing a person may want is for the process to be drawn out longer than necessary. One of the ways in which the divorce process can be prolonged is if one spouse decides to file for bankruptcy in the middle of a divorce. Depending on the case, the filing for bankruptcy and divorce in California can complicate matters relating to the division of property.
Considerations when Filing Bankruptcy and Divorce in California
When you file for bankruptcy, all matters relating to your property and debts are frozen or halted until the bankruptcy case ends; this includes property division in a divorce. California is a community property state. This means that any property acquired during the marriage is divided equally between the spouses when they divorce. This does not necessarily apply in cases involving prenuptial agreements, though.
Filing for bankruptcy creates a bankruptcy estate that includes various kinds of property, including community property. Debts owed by the person filing for bankruptcy are paid from this bankruptcy estate before the bankruptcy can be finalized. Therefore, before the divorce judge can decide property division in the divorce case, the bankruptcy court has to finish dealing with the property. This can cause a delay in the divorce process.
Filing for Bankruptcy BEFORE You File for Divorce
If you and your spouse have a lot of debt, and are in agreement about filing for bankruptcy, you should consider consulting an attorney about filing for bankruptcy jointly before you file for divorce. Just as community property is divided among the divorcing parties equally, so is the marital or community debt. In bankruptcy, the debts are discharged only for the person filing for bankruptcy. If the debts were jointly owned, this may leave the other debtor open to collection efforts from the creditors even after the other person has the debt discharged in bankruptcy. This is another reason for you to consult an attorney to decide if you should file bankruptcy jointly, to avoid the possibility of being left responsible for discharged debt after your former spouse files for bankruptcy.
Child Support and Spousal Support Not Affected
Bankruptcy does not affect child support or child custody and visitation, and a court will still order child support when appropriate regardless of a bankruptcy filing, or a declaration that one spouse is bankrupt. In addition, if a court has already ordered child support or spousal support payments, you cannot avoid payment by claiming bankruptcy. Child support payments are not dischargeable under either Chapter 7 bankruptcy or Chapter 13 bankruptcy. Other debts that arise following a divorce, characterized as non-support payments, may be discharged in bankruptcy, depending on the nature of the payments.
Filing For Bankruptcy and Divorce in California
In most cases where you have no complicated property or child custody issues, you can file for divorce yourself, without the use of an attorney. Similarly, you can file for bankruptcy without an attorney. Unfortunately our office no longer offers bankruptcy document preparation services, however, if you are in the California Central District, the court offers a free online bankruptcy document preparation service which you may want to check out. We can help you with the divorce paperwork at a low cost!