Family Law

San Jose Family Law Attorney explains how to protect your financial interests in a divorce if you think your spouse may later file for bankruptcy protection.

By Scott Sagaria

San Jose Family Law Attorney explains how to protect your financial interests in a divorce if you think your spouse may later file for bankruptcy protection.

If you are going through a divorce, you may be better served by seeking more spousal support and child support, and less physical property, in the property settlement if you suspect your spouse may be considering filing for bankruptcy.  The advantage to you is that domestic support obligations are no longer dischargeable in bankruptcy.  So even if your spouse files for bankruptcy, the spousal support and child support obligations do not go away.

Property settlements, however, can be discharged in bankruptcy.  Even worse, they can come back to bite you if your name is on the loan document when your former spouse files for bankruptcy.  In that event, the lender may come after you for the entire amount owed, instead of just the part that was awarded to you in the property settlement.

Bankruptcy courts have the task of determining what is considered support and what is a property settlement.  Some of the criteria they use include asking:

Does the obligation terminate or reduce with the occurrence of certain events, like remarriage or a child turning 18?

• Is the obligation in installments or a lump sum?
• Are there minor children?
• What is the relative health and education of the parties?
• Was there a need for support at the time of the divorce?

So if you think your spouse is contemplating bankruptcy after your divorce is final, you'll want to word your property settlement in such a way that your soon-to-be-ex's obligation looks and acts as much as possible like a support obligation instead of a property settlement. That is so simply because support obligations are more difficult to have discharged in bankruptcy court.

Here at Sagaria Law, we offer a full range of family law and legal services including  divorce,  paternity, adoption, child custody and visitation matters, child support, spousal support, alimony, juvenile dependency, domestic violence, division of property, grandparent visitation and custody, etc. We have seven California locations including San Jose, San Francisco, Redwood City, Fremont, San Diego, Roseville and Sacramento. We offer a free thirty minute consultation, either in person at any of our offices, or over the phone. Call our offices today and we can connect you with an attorney immediately or we can schedule your free consultation with one of our family law attorneys : (408) 279-2288 or (800) 941-6730 or visit www.sagarialaw.com

Full post as published by California Family Law Blog on November 06, 2009 (boomark / email).