Unfortunately the State Legislature and the United States Congress have made the divorce and bankruptcy laws such that a divorcing person's life is made more unbearable in these two courts. It used to be that the federal bankruptcy court and a local state divorce court (Superior court) were quite separate from each other. They each did their own thing and whatever happened in one court stayed in that court.
Nowadays, there is an overlap as far as the interplay of the laws. The two courts are still separate but what happens in one court is going to be used in the other court. Plus --- each divorcing spouse is going to have to hire their own bankruptcy attorney and divorce lawyer. Unless a given lawyer is admitted to both courts and is familiar with them.
If you can plan your legal life in the courts, it is best to begin the divorce first. Make sure you work with your divorce lawyer about your plans in this regard. Sometime later you will file the Chapter 7 bankruptcy petition. The bankruptcy filing will not stop the divorce case. Both proceed full steam ahead.
The overlap concerns the division of property, child support (if applicable), spousal support (if applicable), and the division of the marital debts. You can no longer wipe out (aka discharge) in bankruptcy court marital debts, child or spousal support assigned to you by the divorce court. Your bankruptcy filing is going to last longer than usual and you may have more court hearings to attend or visits to the bankruptcy attorney's office.
In divorce court, income for each spouse is computed according to a state law that is only for divorce purposes. Plus, divorce court has their own rules as to what is counted as far as deductions and allowable expenses. And of course, if you or a spouse is ordered to pay child support or spousal support, almost always that money is going to be taken from you by court order.
In bankruptcy court, the computation of income, allowable expenses and deductions is figured out differently. There is the requirement for the debtor to document his income by pay stubs or bank statements. Generally speaking divorce court will do this as well.
Divorce and bankruptcy laws thereby cause an apparent conflict as to what a person's income is. Another apparent conflict is caused by the different rules as to how to determine the value of a person's possessions. In bankruptcy court they use what is called the replacement value. That is technically meant as what it would cost to replace property at retail with a discount for its age and condition.
While divorce court they tend to use a different standard. They tend to use a garage sale estimate of the value of property. So obviously there could potentially be problems for the spouse filing bankruptcy because of two different values for the same property. This means that both the divorce and bankruptcy counsel are going to have to coordinate their cases between them. Divorce and filing bankruptcy will change your life in many ways. Just make sure you get wise counsel from your divorce and bankruptcy attorney(s) to best plan these changes.
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