Divorce & Bankruptcy Worlds Collide

The US is in the midst of a bankruptcy boom. Bankruptcy filings in the US topped more than 1 million in the calendar year 2008--- reaching 1,074,225 cases. An increase in 2009 is projected.  The causes of consumer bankruptcies are many, including family breakup/divorce, high debt load, foreclosure, an interruption in income due to job loss, and sustained high medical costs.


The interrelationship between (a) federal bankruptcy laws and (b) state substantive and procedural laws presents issues vital to the state court process, especially in the area of domestic relations. Divorce and bankruptcy are alike in that each attempts to provide a "fresh start." However, the objectives of a divorce case are not necessarily consistent with the goals of a bankruptcy case. The divorce fresh start is from the former spouse. It attempts to divide assets, apportion debt and provide support for the disadvantaged spouse and minor children.

Bankruptcy provides a fresh start for debtors from creditors, and attempts to discharge debts and distribute non-exempt assets among creditors. Recent changes to the US Bankruptcy Code make it harder and more expensive to discharge certain obligations that arise in a divorce, and help illustrate the differences between the objectives of bankruptcy law and family law. Source: American Bankruptcy Institute.


Warmest Regards,

Bob Schaller


Your Bankruptcy Advisor Blog
By: Attorney Robert Schaller (Bob's bio) of the Schaller Law Firm

Bob is a member of the National Bankruptcy College Attorney Network, American Bankruptcy Institute and the National Association of Consumer Bankruptcy Attorneys.

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