Bankruptcy and Divorce
Garden City Law Firm

Can my spouse file for bankruptcy during our pending divorce action?

Yes, either spouse can file for bankruptcy during the divorce. In addition, property acquired by either spouse during the marriage could become part of the bankruptcy and eventually subject to liquidation to pay some or all of the spouses’ debts.

When a spouse files for bankruptcy, the bankruptcy court will issue an automatic stay. The stay prevents creditors from collecting their unpaid debts. The stay also prevents the divorce court from further proceedings, although there are a few exceptions. The automatic stay does not apply to proceedings to establish, modify or collect spousal or child support obligations, or to determine paternity. The automatic stay also does not apply to child custody or visitation determinations.

The divorce court will NOT be able to divide property between the spouses until the bankruptcy court determines which property is exempt from bankruptcy.