Thursday, October 18, 2007

Divorce and Bankruptcy, Part 1

Consumer bankruptcy includes Chapter 7 or Chapter 13. Chapter 7 gets rid of the debts pretty much immediately and is called liquidation. Chapter 13 takes longer and involves a payment plan. Those are the grossest of simplifications but my interest in these posts is more about the impact of bankruptcy on family law than discussing bankruptcy law.

Since the law changed in 2005, I no longer take consumer bankruptcy cases. If you are thinking about filing bankruptcy, I cannot emphasize enough the need for hiring a lawyer who has experience under the new law.

Today, I want to highlight a post on the Oklahoma Family Law Blog, Divorce During Chapter 13 Bankruptcy. When I had a bankruptcy practice, I never had a chapter 13 case where the parties decided to divorce during the bankruptcy case. This post discusses that kind of case and I found it interesting enough to pass along here.

"If you and your spouse cannot agree and your plan payments are not made in full, the Chapter 13 trustee will file a motion to dismiss your case. If you don't want your Chapter 13 bankruptcy to be dismissed, and you only wish to pay for one of the vehicles, the house, or some other portion of your debts, you will need to hire a different bankruptcy attorney to file a motion with the court to bifurcate (split) your case, and file an individual plan for you. Your spouse can also hire another attorney to file a new plan for him or her to pay for the items that he or she wants to keep, or your spouse could convert to a Chapter 7 bankruptcy. Your current bankruptcy attorney cannot represent either you or your spouse unless you both agree to waive the conflict of interest that arises when your attorney seeks to represent only one of you whose interests are contrary to the other's."

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