Properties and Finances

It's not uncommon for people to find themselves faced with the fact that their ex has filed bankruptcy after the divorce has been finalized. Some are genuinely going through a rough patch and are financially burdened, so this is the best step for them to take at the moment. Some tend to think they can abuse filing bankruptcy to get out of support.

If your spouse is filing bankruptcy, the best option for you is to understand your rights and see what you can do to respond to this change in situation. FREE Bankruptcy Evaluation When a person files for bankruptcy, all efforts to collect debts stop unless they satisfy requirements for exceptions in the bankruptcy statute. This is called "automatic stay" under 11 U.S.C. 362(b)(2).

Your primary concern when your ex files for bankruptcy is probably how you will be able to collect support obligations afterwards. The good news is that current support debts survive the bankruptcy, which means you don't have to take your ex to court over whether he/she should pay the support that he/she needs to pay.

Under the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005, child support and alimony payments take priority over other creditors. It even takes priority over taxes owed. This is why it's imortant that you are able to file a proof of claim with the bankruptcy court so that you can receive payment for support debts owed you.

Under the new bankruptcy law, non-support obligations may be non-dischargeable in a bankruptcy provided that the discharge of said obligation would harm the spouse to whom the obligation is said to be owed more than the spouse who owes the obligation. The term non-dischargeable debt means that the person is still responsible for the debt. You'll need to file a claim with the bankruptcy court for this non-dischargeable debt, though. Otherwise, you won't be able to collect it later when the non-exempt properties have been liquidated to pay for outstanding debts.

If your ex owes you money in support, you should receive a notice for a 341 meeting or an initial meeting of creditors. You should also be notified about the deadline for filing a claim. However, sometimes you don't get notified. Whether you hear about your ex's bankruptcy through rumors or through a formal notice, it's best to be proactive and find out the veracity of the bankruptcy yourself.

In the event that you were not able to collect support due or when the bankruptcy court discharges debts before you can file a claim, you always have the option to go back to divorce court and request for an increase in alimony and chid support payments. This also goes for the spouse who filed for bankruptcy because he/she is undergoing financial difficulties. Going to court to reduce the due child support and alimony payments will save you from incurring further support debts that you'll find harder to repay in the future.