I hadn’t hit the steps of my office on the way back from a speaking engagement with family law lawyers before the phone rang with a resulting referral.
My presentation addressed the intersection of bankruptcy and family law. What a fruitful pairing.
While my presentation to a bar section of family lawyers was entitled When Worlds Collide, it could have been Vinegar & Soda, or Matches & Paper.
When the two intersect, the interaction is chemical and startling.
Even if you aren’t ready to face a room full of other lawyers with prickly facts and complex questions, mastering the family law issues in bankruptcy is an essential step to broadening the range of clients you can serve well. .
Spot the bankruptcy issues
Create a chart of the issues in a divorce
- Support
- Division of property
- Non support debts owed by spouse to spouses
- Marital debts owed to third parties
Then for each of the divorce concepts, look at bankruptcy concepts:
- Stay
- Chapter
- Property of the estate
- Priority for payment of claims
- Discharge
You can see the number of different combinations of issues. Then add that the result of your analysis may be different depending on whether the divorce is anticipated, pending, or concluded. Is your mind throbbing yet?
The family law/bankruptcy intersection also highlights the role of state law. State law controls the characterization of the property that comes into the bankruptcy estate. So, you may get different answers to any fact pattern depending on whether you are in a community property state, an equitable division state, or a state that recognizes tenancies by the entirities.
The practice-expanding takeaway
If you expect to survive and thrive in the practice of bankruptcy, you need to expand your skill set so that you can take on more complex cases. Family law, along with small business cases and tax issues, are the sub specialities that will grow your practice.
The second point is that family law can be complex. Don’t plunge in without adequate thought, and line up a mentor, an experienced lawyer on whom you can call for a second opinion.
More on bankruptcy & divorce
When the bankruptcy and divorce worlds collide
Traps in the division of community property
Image courtesy of Wikimedia.
Very interesting article and good insight.
I agree – I started out doing family law, and that background has been extremely helpful in my bankruptcy practice. Family law attorneys are excellent sources of referrals, and we often coordinate our representation of clients.
As I prepared that speech, it popped into my head that family lawyers and bankruptcy lawyers kinda run legal wreaking yards, where broken down clients are towed for makeover.
This is a complicated part of BK I agree.
I had a client with two child support obligations to two
Mothers of his three children. One former spouse demanded he
Indemnify her on an old joint credit card debt. They had no
provision in a court order that provided for this.
My client declined to indemnify former spouse.
We are waiting to see what happens next.
Jackson Morris
Attorney
Belmont
Take a look at whether state law provides a basis for indemnification when two parties are jointly liable on a debt. Since the debt to the creditor preexisted the divorce, I would expect that the obligation to both the former spouse and the card issuer is dischargeable in bankruptcy.