What Happens If We Get A Divorce While in A Chapter 13 Bankruptcy?

When you enter into the union of marriage, you are not normally thinking that it will not last.  Like most, you begin a life together and when creating a life together you may accrue a lot debt.  Unfortunately, relationships change and often times the only solution is divorce.  Just as the divorce affects your jointly owned property, it also affects many other things in your life.  And if you and your spouse find yourselves getting divorced during an active bankruptcy, you should be aware of the impact the divorce will have on your bankruptcy.

Parents walking with young child while holding handsWhen you file bankruptcy as a joint couple, all of your information is shared with one another.  When you divorce, unfortunately sometimes circumstances get ugly.  There are many times that the relationship has ended, not so peacefully let’s say, and one party wants absolutely no contact with the other party.  In fact, they want to just “disappear” from their spouse and want their spouse to have no idea as to their whereabouts.

As your bankruptcy attorney we are privileged to a great deal of personal information, which we must honor.  How can we withhold your information from the person whom you filed with and we represent as well? We wouldn’t, which is why we would need to file a Motion to Withdraw.  We are privy to personal information, and representing the both of you while in a bankruptcy would be a conflict of interest.  The separated couple must then seek separate attorneys who will advise you going forward.

If you and your spouse are in a Chapter 13 bankruptcy due to income (meaning that together, you do not pass the Means Test), there may be an option for your case to be bifurcated or split. In other words, if you pass the Means Test on your own, you may be able to convert to a Chapter 7 individually as a result of the divorce. Even if you both remain in a Chapter 13 or if you both convert to a Chapter 7 bankruptcy, you may do so individually by having your case split into two individual cases.

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