Generally ‘stay order’ in bankruptcy stops all the debt collection efforts. Therefore, by filing bankruptcy a debtor gets a chance to close connection with his creditors, and discharge most of his debts which might not be possible through any other debt management programs. In short, bankruptcy gives you a chance of fresh financial start. But even after filing bankruptcy one cannot shrug off his liabilities toward spouse and children. Especially, if divorce is pending, stay order may not stop the legal proceedings. If issues pertaining to domestic affairs are concerned, legal process may continue. Filing bankruptcy during divorce can be a complicated task when both spouses have incurred debts. Therefore, the assistance of an expert attorney is recommended in this regard.
There are certain cases which can be dealt in the court while stay order is in effect.
- Divorce litigation can continue except to the point of dividing bankruptcy estate property.
- Determine paternity can be exercised during the period.
- One cannot evade child support obligation giving ‘Stay order’ excuse. Therefore, it is a matter of concern which can be established or modified during this time.
- If allegation of domestic violence arises this time, it will be deemed as a criminal offence and must be dealt as per legal procedure.
Though ‘Automatic stay order’ may nullify the collection attempt, it cannot be effective in case of child support and alimony. However, some exceptions in the law have been incorporated under BAPCA.
If any spouse wants to get equitable property division in divorce during bankruptcy, ‘automatic stay order’ will cancel his or her claim.
Collecting domestic obligations (including alimony and child support) cannot be procured from a debtor’s bankruptcy estate.
The debtor must fulfill his or her domestic obligations including monetary support from the non estate property.
If the debtor begins to earn after filing Chapter 7 bankruptcy, those earnings will be deemed to be non-estate property. The debtor must pay off all the alimony arrearages or pending child support with that money. However, the money you have earned after filing chapter 13 bankruptcy,cannot be used to pay off those obligations.
Author Bio:
This is a guest post by Kevin Craig who is a financial writer associated with various finance related Communities. He has been providing advice on debt management since 2007. With his advice, many people are now living a debt free life.You can get in touch with him at kevin.craig672@gmail.com