• Home
  • Bankruptcy in Brief
  • ABC’s of Bankruptcy
  • Considering Bankruptcy
  • True Stories
  • Chapter 13
  • Blog
  • About
  • TOC

Northern California Bankruptcy Lawyer

On The Bankruptcy Soapbox

The Soap Box
  • How bankruptcy works
  • Mortgage Matters
  • Consumer Rights
  • You & Your Lawyer
  • Small Business
  • Family Law

Family Lawyer’s Cheat Sheet to Bankruptcy

By Cathy Moran

family lawyer in bankruptcy

Here, in a nutshell, are bankruptcy basics for family lawyers.

This isn’t everything you need to know to navigate a dissolution where one spouse files bankruptcy, or when marital debts suggest both spouses should file. It’s a start to a complex issue.

You can get the basic introduction to concepts and terms operative in bankruptcy here. For a look at the broader legal themes at play when family law and bankruptcy collide, see this post.

Bankruptcy terms and concepts

Filing Spouses can file alone; only spouses may file together.

Bankruptcy paperwork must list all debts, dischargeable or not, even if disputed

Chapter 7 is a liquidation proceeding where trustee may sell non exempt property, recover preferences, and avoid fraudulent transfers. However, the vast majority of cases are no-asset cases.

Chapter 13 pays debts, in whole or in part, from future income while the debtor keeps his assets.

Assets All community property comes into bankruptcy estate, even if only one spouse files. If property has been finally divided in dissolution, only debtor’s share of former community property is included.

Debts All debts must be listed, whether dischargeable or not, delinquent or not, liquidated or not, disputed or not.

Creditors must file proof of claim to be paid through the case;  claim can assert amounts different from the listing on the bankruptcy schedules.

Duration Chapter 7, from filing to discharge, generally runs 4-6 months. Chapter 13 plans cover 3-5 years, with discharge entered after last payment.

Discharge No debts to spouse or kids arising in a dissolution are discharged in Chapter 7. Chapter 13 can discharge equalizing payments and hold harmless clauses

Liens Liens on assets generally survive bankruptcy. Chapter 13 can cut some liens down to the value of the collateral.

Judicial liens impairing exemptions can be eliminated.

Equalizing payments secured by a lien generally can’t be altered.

Stay Bankruptcy filing enjoins collection of debts existing at filing. Actions to dissolve married status or establish support or paternity are not stayed.

Exemptions Filer can elect one of two California exemption schemes to select property to keep. Exempt property may be divided by family court between spouses.

Homestead California homestead is increased to as much as $678,391 depending on local home values, adjusted annually.

Support Support is not dischargeable in bankruptcy. Bankruptcy law controls whether obligation is support for bankruptcy purposes

Attorneys fees Fees awarded to the other spouse as support are not dischargeable. Fees the debtor owes his own attorney can be discharged.

Priority for payment Support is paid first and in full to the extent of available assets in Chapter 7; support  must be paid in full in Chapter 13.

Trustees Chapter 7 trustee administers assets with non exempt equity. Chapter 13 trustee is disbursing agent for plan payments made by debtor

More bankruptcy basics for family lawyers

Dangers in delaying division of community property

How hold-harmless clauses fare in bankruptcy

5 ways to bankruptcy-proof your divorce

More from the Soapbox

  • When Your STBX Files Bankruptcy: An Action PlanWhen Your STBX Files Bankruptcy: An Action Plan
  • Which Spouse Is Liable For Debts In CaliforniaWhich Spouse Is Liable For Debts In California
  • Better Credit After Bankruptcy: Does Reaffirming A Car Loan Help?Better Credit After Bankruptcy: Does Reaffirming A Car Loan Help?
  • Danger In Delaying Division of Property In CA DivorceDanger In Delaying Division of Property In CA Divorce
  • California’s New Exemptions For Money In The BankCalifornia’s New Exemptions For Money In The Bank

Filed Under: Consumer Rights, Family Law Tagged With: 2021, divorce, family law

About Cathy Moran

I'm a veteran bankruptcy lawyer and consumer advocate in California's Silicon Valley. I write, teach, and speak in the hopes of expanding understanding of how bankruptcy can make life better in a family's future.

Bankruptcy Basics

About The Soapbox

You’ve arrived at the Bankruptcy Soapbox, a resource of bankruptcy information and consumer law.

Soapbox is a companion site to Bankruptcy in Brief, where I try to be largely explanatory and even handed (Note I said “try”).

Here, I allow myself to tell stories and express strong opinions. We dig deeper into how to consider bankruptcy and navigate a bankruptcy case.

Moran Law Group
Bankruptcy specialists for individuals and small businesses in the San Francisco Bay Area

How Bankruptcy Works

Bankruptcy Alphabet: F is for First

In my Bankruptcy Alphabet, F is for First meeting of creditors. Lots of rumors exist about the that meeting; it produces unwarranted anxiety that is avoidable if you understand what's up. Let's check it out. The first meeting of creditors, also called the 341 meeting, is often the only time a debtor has to appear … Read more

More Posts from this Category

643 Bair Island Road
Suite 403
Redwood City, CA 94063
Phone: (650) 694-4700
Phone: (650) 368-4700

Categories

All content copyright © Moran Law Group. All rights reserved.