Yes, they both need lawyers, but
November 9, 2013 9:01 PM   Subscribe

This is for a friend: Bankruptcy first or Divorce first?

He and She are married. He's got a fairly low-paying job, she's a stay-at-home mom of 3 and trying to get an education via online courses.

He's kind of a jerk and their marriage isn't so great. He makes her sleep on a lounge chair in the living room and has to be begged for simple supplies like shampoo and toothpaste. Not surprisingly, she wants a divorce after years of this. She has no money of her own for a lawyer and can't even get the transportation to file papers (they live in a pretty remote area, relatively.) He's dragging his feet.

Suddenly, he wants to file for bankruptcy and announces he's thinking of filing for bankruptcy and hasn't paid the mortgage for a couple of months. (Oh, and also has run up the credit cards.) He says it would be better to do the bankruptcy first, then the divorce afterwards.

My question is, does the timing matter, or is this some kind of trick to avoid her getting the house, child custody, etc.? My gut feel, other than automatically not trusting anything he claims, is that you'd want the divorce sorted out first so that the settlement would be part of the calculus of the debt, no? But then if the divorce went through first, would they have to each do bankruptcy separately?
posted by ctmf to Law & Government (12 answers total) 2 users marked this as a favorite
 
This all really depends on who's name is on the credit card debt and mortgage. She's likely going to need credit soon to help her situation, my gut feeling is to avoid the bankruptcy. And talk to a divorce attorney asap.
posted by Brent Parker at 9:15 PM on November 9, 2013


The timing can matter, and it's going to depend a bit on your state law for divorce and bankruptcy exemptions. It's also going to depend on what they want out of the bankruptcy.

You're in a bit of a tricky situation because divorce is often a contentious process and it doesn't sound like your describing an amicable parting of ways here. Bankruptcy, on the other hand, can require a bit of planning where it helps for everyone to be on the same page.

Although, in a low asset case like I suspect you're describing, there's a fair chance the order wouldn't matter.

Also, a married couple does not need to file for bankruptcy together in every situation. So it may be totally possible for him to file for bankruptcy without her doing the same.

In short, you really need a lawyer in your area. Finally, to answer one of your questions, the black letter law is pretty much that spousal and child support payments are non-dischargeable debts in bankruptcy. But the person making a claim of non-dischargability has a positive duty to prove it. But since you'll generally have a court order describing the debt and characterizing it, that's usually an easily handled issue.
posted by bswinburn at 9:45 PM on November 9, 2013


marriage disintegrating in a debtstorm? divorce first.

not sure if bankruptcy is appropriate for either party. it's a complicated procedure designed to protect income and assets against creditors, and it sounds like there might not be enough of those to warrant this procedure. the divorce lawyer can bring in real estate pros and bankruptcy counsel as necessary to address the house thing.

this is not legal advice.
posted by bruce at 9:47 PM on November 9, 2013 [1 favorite]


Divorce first.
posted by batmonkey at 11:00 PM on November 9, 2013


She needs to pull her credit bureau report first to see why he's so anxious to file. Could it be that he has incurred some debt under her name without her knowledge? This happens all the time and he may want to get it fixed prior to having to stand in front of a divorce judge.
posted by brownrd at 5:26 AM on November 10, 2013 [5 favorites]


Yes, she should start with a credit report, here's the link to the federally mandated free access. Next step should be to take an inventory of all marital assets; house, furniture, vehicle, retirement benefits, and copies of any mortgage, deeds or titles and recent tax returns. Before she makes any move forward she needs to have up to date information. The next step would be to call around to see if any divorce attorneys offer a free initial consultation. She should take the file she's created with their financial information and see what an attorney in her jurisdiction has to say.
posted by readery at 9:19 AM on November 10, 2013 [1 favorite]


Thanks for your thoughts. I know she needs a lawyer, and that I'm not one. He's secretive and hostile and controls the money. She's afraid to bring up difficult discussions. He's got some friend giving him dubious amateur law advice. It's a mess.

I'm just trying to be a supportive friend, which is all I can do. I guess at this point I'm just trying to watch out for and alert her to obvious scams, and offer transportation and that kind of thing. It seems like with their limited assets (couple of year's equity in a modest house, couple of beater cars) it doesn't matter that much which comes first.

I do think his belief that he can and should max out the credit cards because that's all going to go away in the bankruptcy sounds shady in a "too good to be true" way. It also seems like if their plan is to keep the house, the mortgage payment is the number one bill they DO want to keep paying. So either he's stupid, or his "friend" is telling him some stupid divorce strategy that someone here might be familiar with.

I appreciate your experience and anecdotes (while not taking it as legal advice.)
posted by ctmf at 9:56 AM on November 10, 2013


Your friend should talk to a family law attorney and ask specifically about this question.
posted by J. Wilson at 11:52 AM on November 10, 2013


she needs to get the divorce first. she also will need a good lawyer as most likely the husband will wish to assign some or all of the debt to her, which she should try to prevent. it may be possible that she won't have to consider bankruptcy at all after a divorce. but she does need to get legally separated, stat. as someone upthread suggested there is probably something looming that she does not know about. i'm pretty sure that the foreclosure, for example, is put on hold if he files.

if he maxes out his credit cards just before bankruptcy, or if he incurs more debt just before filing it will be noted and make things harder for him. also it may be possible that he will hide debt as the divorce proceeds. in my case my ex was successful in hiding a debt she had in my name which i did not discover until several months after my bankruptcy was finalized.
posted by lester at 12:17 PM on November 10, 2013


IANAL Tell her not to sign anything at all without having a lawyer look at it. If she doesn't have to have bankruptcy on her credit report, she should avoid it. He may or may not understand that joint assets are 1/2 hers, or he may be trying to hide assets, and spend down the rest. If she can pay attention to the mail that comes in, and any accounts, it's a very good idea. The credit report - both hers and his, is also very necessary. (Surely she knows his SSN.) She should also check with the IRS to see if there are taxes owed jointly.

His behavior sounds like a form of abuse, and a family abuse program might be helpful - they will know what the local resources are. She should absolutely get help from any legal aid program.

With 3 kids, he will be obligated to pay child support, possibly alimony. This is what food stamps and welfare are for - a person who is in a rotten situation and who needs help. She can investigate housing assistance, as well. Sometimes there's quite a waiting list.
posted by theora55 at 1:02 PM on November 10, 2013


Lawyers nowadays can do a lot over the phone and internet. But I would make sure she has a truly private way to communicate. That's something you could help her with.

IANYL.

What you're describing isn't uncommon. Depending on the laws and the jurisdiction, the divorce judge will suspend proceedings until the bankruptcy is addressed. Or vice versa. In no case should she rely on her husband's judgment about what is best for her.

Also, financial abuse is a recognized thing, and if there are services in her area for victims of domestic abuse, she will likely be eligible for their services.

To me it sounds like the best way you can help her is to do some legwork for figuring out what services are available to her. You can't consult a lawyer for her (you won't have the information or the confidentiality) but you can probably find one who would do a phone consult with her and help facilitate that.

Please get some local (state level at least) expertise on this ASAP. I don't know where she is but I bet you there is more help available than either of you realize.

One place to start is www.lawhelp.org - you can look for legal services by zip code.
posted by Salamandrous at 2:20 PM on November 10, 2013


This depends on jurisdiction, but where I live, formally acknowledging a legal separation makes each person responsible for their own debts from that date forward (nor or less, like everything legal, there are exceptions). The separation does not have to be mutually agreed. So if his strategy is to run up the credit cards she will not end up paying half the bills for his fishing equipment or whatever he is buying. A legal separation is much cheaper than a divorce and usually a necessary stop towards financial independence.
posted by saucysault at 2:39 PM on November 10, 2013


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