What If My Spouse Files for Bankruptcy During or After a San Diego Divorce?

Divorce creates a lot of financial uncertainty. When one spouse files for bankruptcy during or after divorce, the situation can become complicated. Questions may arise about support payments, past-due obligations, property division, and whether a bankruptcy filing can undo financial responsibilities established by a California family court.

It is important to remember that spousal support and child support obligations are not dischargeable through bankruptcy. But a bankruptcy filing can affect the financial circumstances of both spouses, and this could create issues that need to be addressed in family court.

Amealia J. Mattis is an experienced San Diego divorce lawyer. Mattis Law, A.P.C. can help you address economic concerns and fight to protect your financial future.

Bankruptcy Cannot Discharge Alimony or Child Support

To discharge a debt in bankruptcy means to eliminate your personal legal obligation to repay that debt. Once a debt is discharged, the creditor cannot sue you, garnish your wages, call you for payment, or attempt to collect the discharged debt from you personally.

Under federal law, child support and spousal support cannot be discharged, so those obligations remain, even after the bankruptcy case is completed.

Bankruptcy does not change the amount of ongoing support ordered by a California family court. If circumstances have changed and a person can no longer afford the ordered amount, modification may be pursued through family court.

What Happens to Past-due Child Support After Bankruptcy?

Bankruptcy may help a person reorganize their finances, but bankruptcy does not eliminate the responsibility to pay past-due child support.

A Chapter 7 bankruptcy case may eliminate certain other qualifying debts, but it does not erase child support arrears. In Chapter 13, the debtor must provide for payment of child support arrears through the repayment plan and continue to remain current on support obligations.

Family Court May Consider Spousal Support Modification

The financial events surrounding a bankruptcy may potentially become relevant to a request for modification in family court. For longer-term spousal support, California Family Code § 4320 directs courts to consider numerous circumstances. This includes the parties’ earning capacities, the supporting party’s ability to pay, each party’s needs, their assets and obligations, the duration of the marriage, immediate and specific tax consequences, and the balance of hardships.

Bankruptcy does not erase the support order. But an underlying change in income and financial circumstances may be relevant to whether a modification is appropriate.

A Spouse’s Bankruptcy Can Disrupt Your Finances

When one spouse files for bankruptcy during a divorce, it can affect both parties’ finances even when only one spouse files. The bankruptcy may temporarily delay certain property division proceedings, affect responsibility for jointly held debts, and influence how creditors pursue payment.

If both spouses signed for a credit card, loan, or other debt, one spouse’s bankruptcy discharge generally may eliminate the other spouse’s responsibility to the creditor.

Bankruptcy can also complicate the division of marital assets and debts, particularly when the bankruptcy court and California family court have authority over different issues.

What Should You Do If Your Spouse Files Bankruptcy During Divorce?

If your spouse files for bankruptcy while your divorce is pending, it can affect how and when certain property and debt issues proceed, while family-law matters may be treated differently.

A divorce judgment or settlement may address credit cards, mortgages, loans, property-related payments, equalization payments, attorney fees, and other obligations between spouses. These debts present their own bankruptcy questions.

Do not assume that a bankruptcy discharge eliminates an obligation arising from the divorce. If your own financial circumstances have changed, ask your attorney whether a family-court modification request is appropriate.

Practical steps include:

• Keeping copies of the bankruptcy petition and notices you receive.
• Providing your family law attorney with new information about the bankruptcy right away.
• Gathering current support orders, divorce pleadings, settlement agreements, and financial records.
• Documenting unpaid child or spousal support.
• Continuing to comply with court orders that remain in effect.

Talk to an Experienced San Diego Divorce Lawyer

At Mattis Law, A.P.C., we help clients address the difficult financial and family-law issues that can arise during and after divorce.

If your spouse has fallen behind on child or spousal support, or if your spouse is claiming that bankruptcy eliminates an obligation imposed in your divorce, it is time to seek guidance from an experienced divorce lawyer.

Amelia J. Mattis has been named as a Top 10 Family Law Attorney in California by the American Institute of Family Law Attorneys, and Super Lawyers has recognized her as a Rising Star.

To find out how we can help, call (858) 328-4400 and schedule a free consultation with Amelia today.

FAQs About What Happens When a Divorcing Spouse Files for Bankruptcy

Can bankruptcy eliminate alimony or child support?

Federal bankruptcy law treats qualifying alimony and child support as domestic support obligations that generally cannot be discharged in bankruptcy. Filing for bankruptcy does not automatically cancel an existing California family-court support order.

Am I responsible for my spouse’s debts if they file for bankruptcy during our divorce?

It depends on the nature of the debt, when it was incurred, and whether it is considered a community or separate obligation under California law. A divorce judgment assigning a debt to one spouse also does not necessarily prevent a creditor from pursuing another person who remains legally responsible for the account.

What happens to child support arrears in bankruptcy?

Past-due child support remains owed despite bankruptcy because qualifying child support is considered a domestic support obligation. Filing Chapter 7 or Chapter 13 bankruptcy will not erase accumulated child support arrears.

What happens to community property when one spouse files for bankruptcy?

California is a community property state, so a bankruptcy filing by one spouse can have significant consequences for property acquired during the marriage. Certain community property may become part of the bankruptcy estate even when only one spouse files. The bankruptcy trustee may then have authority over that property, subject to applicable exemptions and other bankruptcy rules.