First Comes Divorce and Then Comes Bankruptcy: What to Expect When One Follows the Other?

Divorce and bankruptcy—two words that can send shivers down anyone’s spine. They’re like the unexpected tag team that crashes the party of your life, leaving you in a whirlwind of emotions and financial chaos. But fear not, dear reader! In this captivating article, we’re diving headfirst into the wild world of Chapter 13 bankruptcy and its impact on divorce settlements.

Can Chapter 13 bankruptcy complicate your divorce settlement?

Absolutely! But fret not, because we’ve got the inside scoop on how to navigate this tangled web.

Have you ever heard the saying, “First comes divorce, then comes bankruptcy? Okay, maybe it’s not as catchy as the childhood nursery rhyme, but it hits close to home for many. Picture this: You’re in the midst of a divorce battle, emotions running high, and just when you think things can’t get any messier, your soon-to-be-ex drops the bombshell—they’ve filed for Chapter 13 bankruptcy! Cue the dramatic music.

But wait, there’s more! Your divorce case suddenly comes to a screeching halt, like a soap opera cliffhanger leaving you hanging. All the issues related to property division are now tangled up in the bankruptcy process, and you’re left wondering, “What the heck happens now?”

Reasons to keep reading:

  1. Unraveling the Bankruptcy Mystery: We’ll break down the differences between Chapter 13 and Chapter 7 bankruptcy, the nitty-gritty of the bankruptcy process, and how it affects your divorce settlement. No more scratching your head in confusion!
  2. Property, Debts, and Trustee Troubles: Discover the rollercoaster ride of property division in the midst of bankruptcy. We’ll dig into exemptions, asset valuations, and the role of those mysterious bankruptcy trustees. It’s like a legal thriller unfolding before your eyes!
  3. Kids, Custody, and Chaos: Your heart skips a beat as you wonder how bankruptcy will impact your child custody arrangements and support. Fear not, we’ll guide you through the stormy seas of co-parenting amidst bankruptcy, ensuring your little ones come out unscathed.
  4. From Debt Disaster to Credit Comeback: Ever wondered how bankruptcy affects your credit score? Brace yourself as we reveal the long-term consequences, but fear not—we’ll also share strategies for rebuilding your credit like a superhero rising from the ashes.
  5. Lawyers to the Rescue: We’ll stress the importance of having legal representation in this topsy-turvy journey. Learn why consulting with a divorce and bankruptcy attorneys is like having a power duo on your side, ready to conquer the legal challenges.
  6. Alternatives and Emotional Resilience: Bankruptcy may not be the only road to freedom. We’ll explore alternatives that could potentially save the day while delving into the emotional and psychological impact of this tumultuous journey. Get ready for some heartfelt advice and strategies for finding your inner Zen.

So buckle up, dear reader, because we’re about to embark on a wild adventure filled with legal twists, heart-pounding challenges, and helpful insights to guide you through the maze of Chapter 13 bankruptcy and divorce settlements. Get ready to conquer the chaos and come out stronger on the other side. Let’s dive in!

Chapter 13 and Divorce Settlements: When Love and Finances Collide

If you have not already done so, I recommend that you go back to yesterday’s blog post from the Law Office of Bryan Fagan, PLLC, and read our thoughts on bankruptcy and its potential impact on divorce. These two processes should not be rushed into, which is why we are choosing to focus some of our blogging efforts on them for this week.

We left off yesterday with me posing a situation to you all: what happens when you and your spouse are in the middle of a divorce, and you get word that your spouse has filed for bankruptcy as well. On top of having another legal case to worry yourself with, what happens with your divorce in the meantime?

For starters, your divorce case will be stopped for a temporary period. Filing for divorce stops all debt collection efforts that are in place for the person who files. Issues related to the dissolution of property are connected to your bankruptcy, so your divorce could not proceed. Your spouse’s property is now under the jurisdiction of the federal bankruptcy court in which they have filed their case and cannot be divided up in your divorce.

The period for which your divorce will be paused depends on the type of bankruptcy case your spouse has engaged in. A chapter 13 bankruptcy means reorganizing your spouse’s debts, which can take up to five years to occur. A chapter 7 bankruptcy, on the other hand, is typically more expeditious but can take a long time as well if the trustee in your spouse’s case takes their time to determine which assets to approve for sale and which ones to abandon.

Issues regarding your child in your divorce can proceed during a bankruptcy.

Not all issues in your divorce are paused during the time of the bankruptcy. Non-property matters, i.e., issues related to your child, are allowed to proceed. This means that child custody, child support, and other portions of your divorce like this will go on as usual. A motion can be filed to request that the bankruptcy court impose the stay on your divorce case so that you and your spouse can continue with your divorce.

If the judge granted a stay in the bankruptcy case, all jurisdiction is vested again within your family law court. This means that the divorce can proceed in all areas. I should be clear that this is the only process you can achieve a completed divorce while a bankruptcy action is also pending. If for some reason, the stay was not lifted and your divorce proceeded anyways, the trustee in your bankruptcy case would not be bound by any of the decisions of the family law court regarding the property. This could lead to all of your efforts in the divorce being for naught.

What happens if your ex-spouse files bankruptcy after your divorce has concluded?

On the flip side of this coin that we are currently examining, your now ex-spouse could file bankruptcy after your divorce has come to an end. Doing so can be a great benefit to you or a negative as far as you are concerned. We will need to explore this issue a little further to help you determine which would apply to you and your situation.

If your spouse owes your child support or spousal maintenance due to the final orders from your divorce, you should know that they cannot discharge this obligation in bankruptcy. This could be great news for you and your children if your ex-spouse has not been able to pay you the child support or spousal maintenance you are entitled to due to an overwhelming amount of debt associated with credit cards or other loans, by discharging these unsecured debts in bankruptcy that could open up a lot of money that could be utilized to fulfill their obligation to you and your children under the Final Decree of Divorce.

You can seek an order from the bankruptcy court that certifies that whatever obligations owed to you based on the demands of the family law court will survive the pending bankruptcy case your spouse has before it. Even if it looks like the bankruptcy has only been filed to eliminate unsecured, non-divorce-related debt, you should still consider doing this.

A Chapter 13 Bankruptcy filing post-divorce complicates matters for you. you

As opposed to a discharge of unsecured debts, as is commonly seen in a Chapter 7 bankruptcy, if your spouse files under Chapter 13, the situation becomes a little murkier for you as an ex-spouse. Since a property settlement was likely arrived at in your divorce, Chapter 7s are sometimes preferable for an ex-spouse in your position because they cannot be discharged in this type of bankruptcy, as we saw in the section above this one. On the other hand, they are dischargeable in a Chapter 13 bankruptcy. If your spouse has filed a Chapter 13 bankruptcy, you may be in for a fight to maintain the obligations that were ordered in the divorce.

Navigating Financial Obligations After Your Ex-Spouse’s Chapter 13 Bankruptcy Filing

In your divorce, you and your ex-spouse both likely agreed to pay certain debts that appeared in both of your names, and in doing so, would offer to indemnify the non-obligated spouse from any further liability under this debt. For example, if you are awarded the home in your divorce, you are expected to sign a Deed of Trust to secure the assumption over to your spouse. This tells your ex-spouse they can come in and take back the house through foreclosure if you fall behind in paying the mortgage.

It is common for those filing bankruptcy under Chapter 13 to remove the obligation of paying debts they are solely liable to under the Divorce Decree. It also happens that while your ex-spouse may be discharged from responsibility for delivering a debt under bankruptcy proceedings, the creditor on loan to a home, vehicle, or another item may look to you for payment.

Protecting Yourself When a Divorce Decree Clashes with Bankruptcy Proceedings

This may come as a surprise to you. Afterall-you signing the same divorce decree that your ex-spouse did and wouldn’t be blamed for thinking that doing so decided the issue about the debt once and for all. I do not relish having to tell a potential client or client that just because you and your spouse agreed to something in a divorce decree does not mean that a credit card company or mortgage lender was a party to the document and is similarly bound by its terms. The fact is these creditors were not parties to the decree, and the law does not see it as a controlling document regarding debt liability.

If this situation sounds familiar to you, my advice would not be to look back to your divorce attorney and instead advise you to talk to a bankruptcy attorney. The attorney practicing bankruptcy law can review your Final Decree of Divorce to see if the debt in question is a part of the property settlement. It could be that if you gave up your rights to make payments on the deficit in favor of your spouse doing so, it becomes more likely that a bankruptcy court could determine that this is more in line with a future support payment than it is a property settlement debt.

Chapter 13 and Divorce Settlements: Navigating Bankruptcy and Property Division

Divorce and bankruptcy can be particularly daunting when it comes to the intricate web of legal processes. This article will delve into the realm of Chapter 13 bankruptcy and its impact on divorce settlements. Understanding the complexities involved in Chapter 13 bankruptcy and its effects on property division, child custody and support, debts, credit scores, and emotional well-being is crucial for those facing these intertwined challenges.

Chapter 13 and Chapter 7 Bankruptcy: Key Differences

Chapter 13 and Chapter 7 bankruptcy are two common forms of bankruptcy, each with its own set of rules and implications. In contrast, Chapter 13 bankruptcy requires the debtor to develop a repayment plan, aiming to gradually pay off debts over a period of three to five years. On the other hand, Chapter 7 bankruptcy focuses on the liquidation of assets to discharge debts. Exploring the eligibility criteria, repayment plans, and dischargeable debts associated with these bankruptcy types will provide a clearer understanding of the options available to individuals navigating divorce settlements.

Types of Bankruptcy

Chapter 13

Chapter 7

Eligibility Criteria

Income limitations apply

No specific income limitations

Repayment Plan

3 to 5 years

No repayment plan, assets liquidated

Dischargeable Debts

Some debts may be discharged

Most unsecured debts can be discharged

Protection of Assets

Provides a framework for

Assets may be liquidated to repay


debt repayment


Long-Term Implications

Remains on credit report for

Remains on credit report for

on Credit Score

7 years

10 years


Restructuring debts and

Liquidating assets to pay off debts


creating a repayment plan


Usefulness in Divorce

Can complicate property

May have fewer impacts on property


division and asset valuation

division and asset valuation


Key Considerations

Requires regular income and

May be more suitable for individuals


commitment to repayment plan

with limited income and assets

The Bankruptcy Process: A Comprehensive Overview

Filing for bankruptcy involves several crucial steps that can significantly impact the outcome of divorce settlements. These steps include filing the bankruptcy petition, meeting with creditors, and attending bankruptcy court hearings. Gaining insights into the bankruptcy process is essential for individuals who find themselves amid divorce proceedings. Understanding how bankruptcy affects property division, exemptions, asset valuation, and the role of bankruptcy trustees will aid in navigating the complexities of divorce and Chapter 13 bankruptcy.

Property Division: The Intersection of Bankruptcy and Divorce

Property division can become particularly complex when bankruptcy enters the picture. Bankruptcy can affect the division of assets, including exemptions and the valuation of properties. Additionally, bankruptcy trustees play a vital role in overseeing the distribution of assets. Exploring these intricacies will shed light on the challenges faced by individuals seeking divorce settlements in the midst of Chapter 13 bankruptcy.

Child Custody and Support: Navigating the Intersection

While bankruptcy can halt certain aspects of divorce proceedings, child custody and support issues are typically allowed to proceed. Determining child custody arrangements, calculating child support obligations, and understanding the potential impact of bankruptcy on these matters are crucial for individuals seeking resolution during this complex time. Exploring the legal nuances and possible courses of action will empower individuals to make informed decisions regarding their children’s well-being.

Bankruptcy’s Impact on Debts: A Comprehensive Outlook

Bankruptcy’s effects on debts extend far beyond the discharge of certain obligations. Understanding how bankruptcy affects different types of debts, such as credit card debt, mortgages, and joint debts incurred during marriage, is crucial. By exploring the implications bankruptcy has on debts, individuals can make informed decisions regarding their financial future and the potential ramifications on divorce settlements.

Post-Divorce Bankruptcy: Unraveling the Consequences

In some cases, an ex-spouse may file for bankruptcy after the divorce has concluded. This scenario can significantly impact property settlements, alimony, and child support obligations. Understanding how post-divorce bankruptcy can affect these crucial aspects allows individuals to better prepare for navigating potential challenges and seeking legal remedies when necessary.

Throughout the divorce and bankruptcy processes, seeking professional legal representation is vital. Consulting with both a divorce attorney and a bankruptcy attorney can provide valuable guidance and ensure that individuals’ rights and interests are protected. This section will highlight the benefits of obtaining legal counsel and provide tips for finding experienced professionals to successfully navigate these complex legal landscapes.

Exploring Alternatives to Bankruptcy

While bankruptcy may seem like the only solution, exploring alternatives is essential. Debt consolidation, negotiation with creditors, and other debt relief programs can offer viable options for individuals seeking to avoid the long-term consequences of bankruptcy. By considering these alternatives, individuals can make informed decisions based on their unique circumstances, potentially minimizing the impact on divorce settlements.

Bankruptcy’s Long-Term Impact on Credit Scores

Bankruptcy can profoundly affect an individual’s credit score, influencing creditworthiness and future financial prospects. Understanding how bankruptcy impacts credit scores and strategies for rebuilding credit post-bankruptcy is crucial for individuals seeking to regain their financial stability and secure future loans or credit.

The Emotional and Psychological Journey

Divorce and bankruptcy are emotionally challenging experiences that can take a toll on individuals. While the legal aspects are crucial, addressing the emotional and psychological impact is equally important. Exploring the emotional challenges faced during divorce and bankruptcy simultaneously, along with strategies for coping and seeking support, will provide a holistic perspective on navigating this complex terrain.


Phew! We’ve journeyed through the maze of Chapter 13 bankruptcy and divorce settlements, and guess what? We’ve emerged wiser, stronger, and ready to conquer any legal challenge that comes our way.

Short answer: Can you navigate Chapter 13 bankruptcy while dealing with a divorce settlement? Absolutely! Our insider tips and insights will equip you to tackle this double whammy like a pro.

Remember that saying, “Love conquers all”? We’re putting a twist on it: “Knowledge conquers all legal woes!” Armed with the knowledge we’ve gained, we’re primed to face property division intricacies, unravel the impact on child custody and support, conquer the debt dragon, safeguard our credit scores, and seek the support of expert legal minds.

But before we part ways, let’s leave you with a little anecdote. Picture this: a superhero cape flapping in the wind, a triumphant smile, and a sense of relief washing over you. That’s you, dear reader, conquering the chaos of divorce and bankruptcy, emerging victorious with your financial future intact.

So, as you journey forth, remember that you’re not alone in this whirlwind adventure. Seek guidance from legal professionals, explore alternatives to bankruptcy, and take care of your emotional well-being along the way. You’ve got this!

Now, armed with our comprehensive guide, face those legal challenges head-on, and pave the way for your happily ever after amidst the legal maze. Remember, knowledge is your superpower, and you’ve got the tools to navigate this complex terrain. Let the adventure begin!


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Frequently Asked Questions – Chapter 13 Bankruptcy

Categories: Divorce, Divorce Lawyer

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