Divorce: When a Spouse or Former Spouse Files Bankruptcy

This CLE course will address the interaction between bankruptcy, divorce, and property divisions. The program will discuss whether to file bankruptcy or divorce first and why it matters; which bankruptcy chapter may be best for certain situations; how bankruptcy affects the division of property and sales of businesses; whether spouses should file jointly or individually; how third-party creditors can join or be joined in a divorce case.

Divorce and bankruptcy often go hand-in-hand. The parties’ counsels must address a dizzying array of factors because bankruptcy can upend the financial plans and goals of divorced or divorcing spouses for the benefit of third-party creditors.

The bankruptcy court can recharacterize support as property division and loans as equity--or vice versa--with significant consequences. Property that can satisfy creditors in bankruptcy is difficult to determine, varies in community property and equitable division states, and turns on which chapter of bankruptcy is filed, exemptions allowed, and even residency.

The law is unsettled and fact-specific for many financial assets, such as education savings accounts, pre-paid tuition, net operating losses, and other tax attributes.

Listen as this panel of experienced bankruptcy and family law attorneys discusses best strategies for achieving the parties' financial goals when divorce and bankruptcy are factors.