When you and your spouse are in the middle of a divorce, you understand how overwhelming and stressful these matters can be. Not only do you have to process the emotional aspects of a divorce, but there are a number of crucial financial and legal decisions you’ll need to make. However, your divorce may become even more stressful when you learn that your spouse has filed for bankruptcy. Unfortunately, this can create a number of issues, so understanding what to expect and the importance of working with Nassau County divorce lawyers is in your best interest. The following blog explores what you can expect if this reflects your current situation.
Can a Spouse Declare Bankruptcy During a Divorce?
While you may assume that a divorce automatically prevents a spouse from declaring bankruptcy, you’ll find this is not the case. As such, someone can file before, during, or after the divorce. In fact, you’ll find that bankruptcy can actually result in an automatic stay that impacts all collection and legal actions against the filer, including your divorce.
Learning that your divorce may be delayed by your spouse’s decision to file can be incredibly upsetting. It’s important to understand, however, that matters related to custody, child support, and alimony are generally able to proceed. Only issues related to the division of assets and liabilities will be paused. This is because the divorce court cannot finalize the division of assets until the bankruptcy court has determined what property is considered part of the bankruptcy estate.
What Happens to Marital Property?
Unfortunately, in New York, when one spouse declares bankruptcy, all of their property will become part of the bankruptcy estate, including jointly owned property. As such, your home (if jointly owned), joint bank accounts, and other marital property will be subject to seizure by the bankruptcy court.
It’s important to understand that, as a non-filing spouse, your separate property is not subject to seizure by the bankruptcy court. Additionally, in the event that marital property is sold, you are entitled to your portion of the funds recovered from the property. You should also note that there are a number of exemptions your spouse may utilize, which will protect certain property from becoming part of the bankruptcy estate.
What Can I Do if My Spouse Files?
Learning that your spouse has declared bankruptcy during your divorce can be incredibly upsetting, as it not only impacts your ability to proceed with the divorce but also affects how the marital property you are entitled to is distributed. As such, it is in your best interest to connect with an experienced divorce attorney who can examine your situation to help you protect your rights during this process. For example, your lawyer can help you prove that certain assets are your separate property so they are not taken by the bankruptcy trustee.
When you are going through a divorce that is made even more stressful by a spouse’s decision to declare bankruptcy, working with an experienced attorney with the Sklavos Law Firm is in your best interest. Our team understands the complexities of these matters, which is why we are dedicated to making this process as simple as possible for you. Contact us today to learn how we can represent you in these matters.