Chapter 13 and Divorce
You and your spouse filed a joint Chapter 13 bankruptcy, and now things have gone south with your marriage. If you and your spouse are facing a divorce after you’ve filed Chapter 13, there are several things to consider.
First and foremost, your bankruptcy attorney may face a conflict of interest if you and your spouse have divorced. Because divorce is an adversarial process, your bankruptcy attorney cannot continue to represent both of you.
With regards to your Chapter 13 plan, you and your ex-spouse have several options for continuing in bankruptcy:
- Maintain plan payments: If you and your ex-spouse are separated on good terms, you can agree on a division of plan payments and continue to make the payments in your Chapter 13 plan.
- Convert into a Chapter 7: Because you have now separated into 2 households, your costs and expenses have probably increased. With these increased expenses, you may be eligible to convert your current Chapter 13 into a Chapter 7 bankruptcy and achieve discharge in that way.
- Reduce Chapter 13 plan payments: If you don’t want to convert into a Chapter 7, you and your ex-spouse may succeed in a motion to lower your plan payments due to the increased expenses in having 2 separate households.
- Bifurcate: If you and your ex-spouse are not able to continue a bankruptcy together because you are not agreeable, the last option you have is to separate your bankruptcy into two separate bankruptcies. Once the bankruptcy gets separated into each personal bankruptcy, it would be each person’s prerogative to move forward with a Chapter 13 or a Chapter 7, or any other decisions that are to be made.
There are several other considerations that need to be taken into account with a divorce in a Chapter 13 joint bankruptcy, including property transfers. If you have a bankruptcy question and need to discuss options with an attorney, contact Dailey Law Offices to set up a free consultation in our Hilliard or our Delaware office.