Bankruptcy During Divorce

Birmingham Bankruptcy Attorneys experienced in dealing with divorced clients in Mountain Brook, Vestavia Hills, Homewood and the rest of Alabama

A divorce not only causes strain on the emotions, it also causes immense strain on your finances.  While you may have been able to maintain one household while married, now that you are separated, you have two households to support, all while trying to move on with your life.  Sometimes, just as in a divorce, you need a clean start by filing bankruptcy.

Divorced spouses are free to file for divorce on their own.  Even during the marriage, one spouse may file for bankruptcy without the other being included in the filing.  This usually only occurs when certain debt is not joint debt.  However, since debts incurred during marriage are typically the responsibility of both spouses, creditors would simply pursue collection of the debts from the non-bankrupt spouse.  That is why married parties usually both file for bankruptcy.  In the event of a divorce, the divorce court cannot prevent creditors for pursuing the non-bankrupt spouse, and cannot order the spouse who has discharged the debt to pay it.

In many states, a spouse may acquire title to his or her ex-spouse’s property upon the filing of a divorce or dissolution action. An individual may become legally liable for debts on these property interests, which the ex-spouse was required to settle.  These are dischargeable unless the obligation is in the nature of support. Obligations owed to a spouse or former spouse for alimony, maintenance or support are not dischargeable if certain criteria are met: 1) the debt was incurred in connection with a separation agreement, divorce decree, or other order of a court, 2) the debt must be “actually in the nature of alimony, maintenance, or support, and 3) the debt must not have been assigned to another entity other than certain governmental agencies.

However, certain “alimony” may be dischargeable in Alabama, depending on whether the alimony is considered “alimony in gross” or “periodic alimony.”  Let our Birmingham legal team at Parkman White, LLP review your divorce decree to determine what obligations may be dischargeable in bankruptcy.  If you are not yet divorced, but are considering a divorce as well as bankruptcy, call us to advise you through the process so we can help protect your rights and your assets.  Contact us today at 205-502-2000.