Bankruptcy & Divorce in New York
How each affects the other
There are several aspects of New York divorce and bankruptcy law that have related consequences. Let’s consider each one in turn
Debt that leads to divorce
Financial distress can certainly be one cause of marital discord. Money and spending habits are often cited as major conflicts in marriages that end in divorce. Excessive use of credit, especially in the months preceding a divorce can be the catalyst for divorce pleadings to be filed.
If you file for bankruptcy while your divorce is in progress, you will delay the final divorce settlement or trial. That is because while the bankruptcy is in progress, disposition of the marital property is under the control of the federal bankruptcy court. While a New York State family court judge can decide issues related to alimony, child support, custody and parenting time, the division of marital property must wait for the Federal bankruptcy court to release control of it.
Divorce that leads to debt
If after a final divorce judgment you are left with the responsibility to pay various debts that had accrued during the marriage, you might look to have those debts discharged by bankruptcy.
But consider what could happen. Once a joint marital debt has been discharged in your bankruptcy, the creditor can no longer collect on the debt from you. However, the creditor can still seek payment from your ex-spouse. After your ex-spouse pays the debt that your divorce judgment said was your responsibility, your ex-spouse can then take you back to family court to request reimbursement from you. That request is likely to be granted, thus effectively eliminating the bankruptcy discharge of that debt.
Payments in exchange for property
Your divorce judgment may provide for you to make payments to your ex-spouse in exchange for property. These payments are not dischargeable in a Chapter 7 bankruptcy. However, if you file a Chapter 13 bankruptcy, you can include these payments in your wage earner’s plan to repay your debts over a three to five year period. The trustee pays your ex-spouse along with all other creditors from your monthly payments. At the end of the plan, if there is debt remaining to be paid to your ex-spouse, that debt may be discharged.
Alimony and child support
Alimony and child support arrears are not dischargeable in bankruptcy. In fact, a Chapter 13 discharge cannot be finalized if you are not current in your alimony and child support payments.
Let an experienced NY bankruptcy attorney help you file for bankruptcy
If you live in New York City and think bankruptcy may be a viable option for you, contact the Law Office of Gregory Messer online or at 718-717-2368 to schedule a free initial consultation. Our office is located across the street from the U.S. District Bankruptcy Court in Brooklyn and is close to the Borough Hall and Court Street subway stations. We serve residents throughout Brooklyn, Bronx, Manhattan, Staten Island and Long Island.
To ensure every client’s filing receives the attention it deserves, we are an appointment-only law firm with flexible hours adjustable to fit your needs.