Divorce and Bankruptcy
As a Boise Divorce Attorney and Idaho Bankruptcy Lawyer I field numerous questions about the effect of bankruptcy on divorce and visa versa. Probably the most common question I receive has to do with the timing of bankruptcy. People want to know if they should file for bankruptcy before or after divorce. There are a few things which must be considered when answering this question.
Community Property and Debt in Idaho
Idaho is a community property state. It follows, therefore that it is also a community debt state. If you are considering filing bankruptcy before, during or after divorce, you must consider the effect of community debt on your bankruptcy.
The debt you incur during a marriage is a community debt (with a few exceptions which won't be discussed here today). If one party files for bankruptcy before divorce, they will include all the community debt in the petition. If the bankruptcy is accepted by the court, the debt is discharged as to that individual, but not to the other member of the community. This potentially leaves the non-filing party with the complete responsibility of all the debt. It general, it is always best for a couple to file bankruptcy together so that all the dischargeable debt is discharged for both parties.
Bankruptcy After Divorce
Another twist pops up when you file for bankruptcy after divorce. When you split the community debt with each party taking a certain split of what is owing, that technically does not leave the other party free from those debts. They are still community debts but the responsibility is just assigned to one party or the other. If the party assigned the debt fails to pay there are legal avenues to get a judgment against them or order them to pay. If one party files for bankruptcy after the divorce and the non-filing party will still be responsible for the debt split in the divorce.
Yet another complication is when an individual files for bankruptcy after a divorce and fails to include all the community debt. Sometimes people think they just need to include the debt they were assigned in the divorce. In all likelihood, however, the trustee in bankruptcy will discover this over site and require the petition to be amended to include all the debt.
If you are seeking a divorce and need to speak to a Boise Divorce Attorney or you are filing bankruptcy and need to speak to a Boise Bankruptcy Lawyer, give us a call, 208-472-2383 and see what we can do for you. You will be glad you did.
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ReplyDeleteNice post! They are still community debts but the responsibility is just assigned to one party or the other. If the party assigned the debt fails to pay there are legal avenues to get a judgment against them or order them to pay. If one party files for bankruptcy after the divorce and the non-filing party will still be responsible for the debt split in the divorce.
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