Family Law and Bankruptcy

When a party to a family law case files bankruptcy, in general there is an automatic stay under federal law to all actions against the debtor or the debtor’s property.

However, there are numerous family law exemptions to that stay provision.  All actions to establish and modify child support and alimony and paternity orders may proceed. This includes medical obligations and all obligations “in the nature of” support, such as a duty to pay liabilities and debts.  All actions to enforce payment may proceed, except as to assets of a debtor’s estate being administered by a bankruptcy trustee.  These would include wage attachment, reporting to credit bureaus, tax intercept and license suspension.

Custody actions may also proceed without the need to apply to the bankruptcy court for relief from the automatic stay, as can protection from abuse actions, except for monetary relief, such as lost wages, property damage, counsel fees and medical expenses, which may not be sought.

Divorce actions may proceed, but not equitable distribution, as to which relief from the automatic stay by motion is needed from the bankruptcy judge.  All family law obligations – support, alimony and property division, whether by agreement or court order – are non-dischargeable in bankruptcy, meaning that after a discharge is granted the obligations remain enforceable. Further, in a Chapter 13 wage-earner bankruptcy, support obligations are the number one priority and must be current before a discharge order can be entered.  The confluence of bankruptcy and family law can be murky sometimes.  See a lawyer familiar with both fields if a question arises.  We can help!

By: David I. Grunfeld, Esquire