In the bankruptcy case involving divorce and a Chapter 7 bankruptcy , a debtor allegedly used the threat to waive his bankruptcy exemptions as leverage in his divorce proceedings.

The details of the case:

The debtor filed Chapter 7 bankruptcy in March 28, 2005 and in July 2005 the bankruptcy court ordered the lifting of the automatic stay to allow the debtor’s divorce proceedings to move forward.  The debtor voluntarily requested that the time to object to his bankruptcy discharge be extended.  In other words, he wanted creditors to get more time to access his assets (by challenging his discharge) than would otherwise be granted.  The debtor’s wife opposed the extension saying the debtor was “improperly threatening to waive his property exemptions over community property to gain bargaining leverage in the divorce action.”

Let’s stop there.  This is a no-no.  We understand how emotional divorce can be; but bankruptcy is not the time to “fight it out” with a spouse.  Allowing creditors extra opportunity to access your assets because you want revenge on a spouse is financial suicide.  This doesn’t just harm your spouse, it also harms your bankruptcy case and by extension your financial future.

If you are going through a difficult divorce and you want to file bankruptcy, you may want to consider working with a mediator and your bankruptcy attorney to hash out the important details (i.e. community property) BEFORE you file for bankruptcy.  The last thing you want is to battle creditors AND an estranged spouse.  To find out more about how you can smoothly file bankruptcy while going through a divorce, contact a Dallas-Fort Worth bankruptcy attorney.