Presenting a live 90-minute webinar with interactive Q&A Divorce: When a Spouse Files Bankruptcy Dischargeability of Domestic Support Obligations and Property Settlements WEDNES DAY, FEBRUARY 15, 2012 1pm East ern | 12pm Cent ral | 11am Mount ain | 10am Pacific Today’s faculty features: Kenneth Paul Carp, At t y, Law Office of Kenneth P . Carp , Clayt on, Mo. Amy L. Gervich, At t y, Law Office of Amy L. Gervich , S t . Louis Charles E. N. Rosene, At t y, Law Office of Charles E.N. Rosene , S aint Charles, Mo. The audio portion of the conference may be accessed via the telephone or by using your computer's speakers. Please refer to the instructions emailed to registrants for additional information. If you have any questions, please contact Customer Service at 1-800-926-7926 ext. 10 .
Conference Materials If you have not printed the conference materials for this program, please complete the following steps: • Click on the + sign next to “ Conference Materials” in the middle of the left- hand column on your screen. • Click on the tab labeled “ Handouts” that appears, and there you will see a PDF of the slides for today's program. • Double click on the PDF and a separate page will open. • Print the slides by clicking on the printer icon.
Continuing Education Credits FOR LIVE EVENT ONLY For CLE purposes, please let us know how many people are listening at your location by completing each of the following steps: • Close the notification box • In the chat box, type (1) your company name and (2) the number of attendees at your location • Click the S END button beside the box
Tips for Optimal Quality S ound Qualit y If you are listening via your computer speakers, please note that the quality of your sound will vary depending on the speed and quality of your internet connection. If the sound quality is not satisfactory and you are listening via your computer speakers, you may listen via the phone: dial 1-866-961-9091 and enter your PIN -when prompted. Otherwise, please send us a chat or e-mail sound@ straffordpub.com immediately so we can address the problem. If you dialed in and have any difficulties during the call, press *0 for assistance. Viewing Qualit y To maximize your screen, press the F11 key on your keyboard. To exit full screen, press the F11 key again.
BANKRUPTCY AND DIVORCE Kenneth P. Carp Amy L. Gervich 5 Charles E. N. Rosene
OVERVIEW • Bankruptcy Basics – Chapter 7 vs. Chapter 13 • Who files and When • Bankruptcy Estate and Limitation • Qualified Domestic Support Obligations – Exception: 11 U.S.C. § 523(a)(5) – Property Settlement Debt Exception: 11 U.S.C. § 523(a)(15) – Automatic Stay – Preferential Treatment of Creditors • Separation Agreements – Factors Courts look at – Intent of the parties – Protect your fee – Protect your client from “spousal revenge” • Foreclosure • Practical Tips/Possible Pitfalls 6
Divorce vs. Bankruptcy Either the last thing together or the first thing separate • Divorce – Can provide: • fresh start • separation of assets • visitation of children • Just a divorce can help you start over and rebuild life, bankruptcy can help you rebuild your financial affairs by getting rid of old debts and allow you to rebuild your financial future 7
CHAPTER 7 • Purpose – Fresh Start – To have the debts discharged while keeping exempt property • Debt is Discharged – Section 523(a) of the bankruptcy code sets forth all non- dischargeable debts • Means test is qualifying criteria – Looks at income from all sources in last 6 months – If the mean income exceeds income threshold, then there are deductions to see whether they qualify – Deductions including: • Non cmi income • Taxes • Secured debt repayment • Court ordered DSO – If they don’t qualify for a 7 (too much income or failed means test), then Chapter 13 8
CHAPTER 13 • Repayment of debt over 3 or 5 years – Allows debtor to keep your property – Some unsecured debt can get discharged – Some junior mortgages can be discharged • Characterization of DSO – Unsecured DSO has priority over other debts – No discharge unless all DSO obligations are met • Including pre-petition arrearages • Non-Filing Spouse and Chapter 13 – Ex-spouse can: • review plan and object to confirmation of Chapter 13 plan • file a claim • appear at the meeting of creditors – If debtor is not current in post-petition domestic support, the ex-spouse may consider filing a motion to dismiss • Is that in his/her best interest? • Assessing value of assets – Bankruptcy = liquidation value – Divorce = market value – Be sensitive to the interplay between valuing assets in bankruptcy and divorce 9
CHAPTER 7 CHAPTER 13 • Discharge of Debts • Pay Debts • Means Test to Qualify • Plan to Qualify • Keep exempt • Keep all Property Property • Over in 3 or 5 months • Over in 3 or 5 years • Reaffirm mortgages • Renegotiate mortgages • Easy to complete • Very difficult to complete 10
Chapter 7/Chapter 13 Income Qualifiers • Chapter 7 • Chapter 13 – Means Test/Threshold – Every dollar is accounted for (Missouri only) – Can’t have over • Single <$39,332 $336,900 unsecured • 2 People <$51,120 debt OR • 3 People <$58,610 – Over $1,010,650 • 4 People <$69,832 secured debts • 5 People <$77,332 • 6 People <$84,832 – Household Size – Secured Debt Payments 11
Chapter 7/ Chapter 13 Prior Bankruptcy Filings • 8 years since last • Must not have Chapter 7 filed received: – Chapter 7 discharge within 4 years prior OR – Chapter 13 within 2 years prior 12
BANKRUPTCY ESTATE • 11 U.S.C. 541 – All assets owned by debtor comprise bankruptcy estate – RSMO 513.430, RSMO 513.440, RSMO 513.475: • Property can be exempted 13
AUTOMATIC STAY • 11 U.S.C. 362 – Divorce court loses jurisdiction to divide property. • Crowley v. Crowley, 715 S.W.2d 934 (Mo.App. 1986). • Automatic Stay does not prevent: – Establishment of Paternity – Establishment of Modification – Child Custody or Visitation – All other dissolution issues other than property » Trial can be bifurcated – Stay against all creditors – Only applies to filing party (not to non-filing spouse) – Relief from stay can be obtained from bankruptcy court 14
Who Files and When • Garnishments • Foreclosures • Median income level • Household size • Court ordered support payments 15
Statement of Affairs vs. Bankruptcy Petition • Assessing value of assets – Bankruptcy = liquidation value – Divorce = market value – Be sensitive to the interplay between valuing assets in bankruptcy and divorce • Bankruptcy trustee has the ability to look at Statement of Affairs just like the divorce attorney can look at the bankruptcy petition 16
Discharge Exclusions • Excluded from discharge: – 11 U.S.C. § 523(a)(5): DSO • All marital and domestic relations debts incurred in connection with a separation, divorce or related action. – 11 U.S.C. § 523(a)(15): Property Settlement Debts • Any obligations coming from a dissolution judgment or separation agreement are not dischargeable in bankruptcy. • Applies not only to property settlement obligations in dissolution judgments, but also to obligations to pay for debts contained in dissolution judgments. 17
DSO Domestic Support Obligation is defined in Section 101(14A) of the Bankruptcy Code. Section 101(14A) provides that a DSO is: [A]debt that accrues before, on, or after the date of the order of relief in a case under this title, including interest that accrues on that debt as provided under applicable nonbankrtuptcy law notwithstanding any other provision of this title, that is (A) owed to or recoverable by – (i) a spouse, former spouse, or child of the debtor or such child’s parent, legal guardian, or responsible relative; or (ii) a governmental unit (B) in the nature of alimony, maintenance, or support (including assistance provided by a governmental unit) of such spouse, former spouse, or child of the debtor or such child’s parent, without regard to whether such debt is expressly so designated; (C) established or subject to establishment before, on, or after the date of the order for relief in a case under this title, by reason of applicable provisions of – (i) a separation agreement, divorce decree, or property settlement agreement; (ii) an order of a court of record; or (iii) a determination made in accordance with applicable nonbankruptcy law by a governmental unit; and (D) not assigned to a nongovernmental entity, unless that obligation is assigned voluntarily by the spouse, former spouse, child of the debtor, or such child’s parent, legal guardian, or responsible relative for the purpose of collecting the debt. 11 U.S.C. § 101(14A). 18
Recommend
More recommend
