Bankruptcy and Divorce

1/18/17

By Linda Ostovitz, Esq., Offit Kurman, Attorney At Law

A divorce can go from bad to worse when bankruptcy is involved. While each spouse may blame the other for financial problems, both may be affected by the debt incurred during the marriage. For example, even a divorce settlement that details responsibility for debt cannot stop a creditor from coming after both parties to collect money owed by both parties. However, if one person is discharged in bankruptcy before that joint debt is satisfied, then creditors may collect from the other spouse or ex-spouse post divorce. Not having the funds to repay a joint debt may cause the second spouse to file for bankruptcy too.

While it is best to consult with a bankruptcy lawyer for guidance on bankruptcy issues, an experienced family law attorney can help you determine if it is in your best interest to file for bankruptcy in connection with a divorce. To optimize the results, you and your spouse should work together. Once the conditions of the bankruptcy have been determined, then both spouses will have a realistic picture of their financial obligations.

Bankruptcy Discharge

A discharge in bankruptcy releases the debtor from personal liability for certain specified debts. A discharge results in a permanent order that prohibits creditors from taking any action to collect the debt, including legal action and communication with the debtor through phone calls and letters. Not all debts are dischargeable, and those that are not, are grounded in public policy considerations.

Child Support

It is common for child support to be included in an agreement and/or a court order. Child support is paid by the non-custodial parent to the custodial parent representing his portion of the contribution to support the child, and it is not dischargeable in bankruptcy.

Alimony

Alimony is a court-ordered or agreed upon provision specifying that one spouse must pay money to help support the other spouse. Alimony is not subject to a discharge in bankruptcy.

ABOUT LINDA SORG OSTOVITZ

Linda Ostovitz

Linda Sorg Ostovitz is a family law attorney. Her legal experience spans more than 34 years. In this time, she has served as a leader, educator and advocate. Mrs. Ostovitz holds a prestigious fellowship in the American Academy of Matrimonial Lawyers. Currently, she serves as President for the Business Women’s Network of Howard County, by which she was chosen Woman of Distinction for 2014. Mrs. Ostovitz represents clients in Howard, Anne Arundel, Carroll and Baltimore Counties. Her practice focuses exclusively on divorce litigation and mediation, child custody and access, child support, alimony, business valuation, as well as property and asset distribution. In addition to providing legal representation in court, Mrs. Ostovitz provides mediation services to help families come to a fair and legally-sound conclusion outside of the traditional court proceedings.

ABOUT OFFIT KURMAN

Offit Kurman is one of the fastest-growing, full-service law firms in the Mid-Atlantic region. With over 130 attorneys offering a comprehensive range of services in virtually every legal category, the firm is well positioned to meet the needs of dynamic businesses and the people who own and operate them. Our ten offices serve individual and corporate clients in the Maryland, Delaware, New Jersey, and Northern Virginia markets, as well as the Washington DC, Baltimore, Philadelphia, and New York City metropolitan areas. At Offit Kurman, we are our clients’ most trusted legal advisors, professionals who help maximize and protect business value and personal wealth. In every interaction, we consistently maintain our clients’ confidence by remaining focused on furthering their objectives and achieving their goals in an efficient manner. Trust, knowledge, confidence—in a partner, that’s perfect.

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