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Divorce Library > California Bankruptcy


California Bankruptcy and Divorce - Chapter 7 Bankruptcy ("Liquidations"), Chapter 13 Bankruptcy ("Reorganizations")


Featured Southern California Divorce & Bankruptcy Attorney
Hosford & Hosford, Inc.
Hosford & Hosford, Inc. represent clients on Chapter 7 and Chapter 13 California bankruptcy petitions. Free consultation
Law Offices of Merritt Mckeon
Merritt McKeon provides Chapter 7, Chapter 11 and Chapter 13 bankruptcy and divorce legal help and family mediation services.
Law Office of Selena Devine
Selena Devine is a bankruptcy lawyer offering legal help with Chapter 7 bankruptcies. Ms. Devine offers a free consultation.

What is Bankruptcy Law?
Bankruptcy is a federal court process designed to help individuals or businesses eliminate their debts or repay their debts under the protection of the bankruptcy court. Bankruptcy and divorce is on the rise due to the financial cost and stress often associated with divorce proceedings. Bankruptcy has many rules and exceptions such as what kinds of debts are covered, who can file, and what property you can and cannot keep.

Common Types of Bankcruptcy
The two most common types of Bankruptcy are Chapter 7 Bankruptcy ("liquidations") and Chapter 13 Bankruptcy ("reorganizations").

Chapter 7 bankruptcy is the liquidation variety of a bankruptcy in which property is sold (or liquidated) to pay off as much of your debt as possible, while leaving you with enough property to start over or have a “second chance.”

Chapter 13 bankruptcy is often referred to as an individual debt adjustment and is the most common type of "reorganization" bankruptcy for consumers in which you repay your debts over three to five years.

Both a Chapter 7 bankruptcy and Chapter 13 bankruptcy have numerous rules and exceptions such as what kinds of debts are covered, who can file, and what property you can and cannot keep. Therefore, if you are thinking about filing bankruptcy you do well to consult a bankruptcy lawyer or bankruptcy attorney to help you learn if and what type of bankruptcy would make sense for your situation.

Bankruptcy and Divorce
Due to the financial cost and stress often associated with a divorce and child custody cases, bankruptcy and divorce often go hand-in-hand. If you and/or your spouse have accrued lot of debt, it may make sense to file for bankruptcy.

Often it is more advantageous to file for bankruptcy before you file for divorce rather than after the divorce proceedings have started. Filing bankruptcy can simplify the divorce process by getting rid of some of the debt you and your spouse have. This also tends to make it easier to negotiate and reach settlement on how the remaining debts should be divided and protect you from your soon-to-be ex-spouse filing bankruptcy down the road, thereby transferring the debt to you. Lastly, it's generally less expensive to file a joint bankruptcy than filing bankruptcy separately. You would do well to consult a bankruptcy attorney to help you learn if, when, and what type of bankruptcy to file.

Once a bankruptcy court decides property is "exempt" (not available to be sold to pay debts), a divorce court can then divide that property.

Bankruptcy Automatic Stay
When one or both spouses file bankruptcy, all of the community property becomes part of the bankruptcy estate and is available to pay debts. An automatic stay will immediately go into effect preventing creditors from collecting on most debts. But the automatic stay doesn't prevent you from asking a divorce court to order your spouse to pay child support or alimony. Some family courts will require you to get an order from the bankruptcy court stating that the bankruptcy court doesn't have authority over support matters.

There are several automatic stay exceptions. The most important for most claimants in divorce are the two exceptions described in Section 362(b)(2) of the bankruptcy statute. The first allows actions to continue for establishing paternity or to set up payment of alimony or support. The second allows actions to continue to collect alimony, maintenance, or support from property that's not part of the bankruptcy estate.

Bankruptcy Abuse Prevention and Consumer Protection Act (BAPCPA) of 2005
The Bankruptcy Abuse Prevention and Consumer Protection Act (BAPCPA) of 2005, became effective Oct. 17, 2005. Under the new law, BAPCPA has made it much more difficult for debtors to evade domestic relations responsibilities (DSO) such as alimony or child support. Previously, debtors were allowed to discharge nonsecured property settlement obligations to former spouses. The BAPCPA law no longer allows this. BAPCPA makes any domestic support obligation "DSO" a "first priority claim," ineligible for discharge.

For those getting divorced and considering bankruptcy this new bankruptcy law could significantly affect you. If you (or your soon-to-be ex-spouse) are thinking about filing a Chapter 7 Bankruptcy petition or a Chapter 13 Bankruptcy petition, you would do well to consult a California Bankruptcy attorney to find out if filing bankruptcy

Bankruptcy and Divorce Considerations
Bankruptcy and divorce filings by consumers (non-business bankruptcy filings) before and after a divorce are becoming more and more common. If you (or your soon-to-be ex-spouse) are thinking about filing bankruptcy it is important to consult a bankruptcy attorney to help you determine if filing a join bankruptcy is right for you and when it would be wise to file (i.e. before or during the divorce proceeding). If you believe your spouse is thinking about filing bankruptcy a bankruptcy attorney can help you learn how you can protect yourself and what course of action you should take.

Featured Southern California Bankruptcy Lawyers, Southern California Bankruptcy Attorneys & California BK Lawyers
Hosford & Hosford, Inc.   Tustin, CA
Providing agressive legal representation on California bankruptcy law. (714) 730-8202
Law Offices of Merritt McKeon   Irvine, CA
Assisting and representing clients on California bankruptcies. (714) 558-7922
The Law office of Selena Devine   Ventura, CA
Legal assistance with California bankruptcy law matters. Free consultation (805) 654-0200
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