Bankruptcy and Divorce
Hello, this is Jeff Kelly! I'm a bankruptcy attorney, in the Northern District of Georgia. Today, I want to talk about Bankruptcy and Divorce, and the number one issue, that we need to consider, if somebody's going through a divorce, are the ethical implications, and what that is, your attorney has a duty of loyalty, to both the husband and the wife, so if they're going through a divorce, this can present a conflict, this can be very difficult situation, and when an attorney gets caught, in the middle of a case and the clients are getting divorced, the most ethical thing to do, is for the husband and wife to both fire the attorney, and hire a new attorney, so that that way they both have individual attorneys, that represent them and have a duty of loyalty to them and to them only.
In reality most clients don't do that, because that cost a lot of extra money, so every now and then, with Chapter 7 we'll have a couple coming in, that's about to go through divorce, and they will want to go ahead and file the Chapter 7 together, because it doesn't cost any extra for a husband and wife to file together, whereas if they file individual cases, they're going to double their costs, double the transaction cost. Now the only time this really works is, number one, when they both come in, and they're willing to waive all of the potential ethical conflicts, now, if there is an actual conflict, your bankruptcy attorney cannot represent you, you'll have to get individual attorneys, but if there's a situation where husband and wife are coming in they both want to file Chapter 7, they're about to go through a divorce, they want to get a clean fresh start, and move on, and they're going to surrender all their assets, and there's not going to be, you know, if you're surrendering every asset, we're wiping everything out, there's really not much potential for conflict, but let me describe a situation, where there most definitely would be a conflict, and we've seen this happen before.
Our client comes in, you got a husband and wife, and you have a car, and the wife really wants to keep this car after the divorce, but the problem is, the car is in the husband's name only, this is a conflict because it's in the best interest of the wife to keep the car, however, it's in the best interest of the husband, to surrender this car in the Chapter 7 because, this is his chance to get his name off the car, otherwise, if let's say you go through a Chapter 7, and the husband reaffirms the debt on the car, in other words he reallocates himself in the car, so that his soon-to-be ex-wife, can keep the car this can be problematic, when you know, two, three years, down the road, if she gets into trouble and she doesn't make the payments, well, guess who's gonna be left holding the bag, and who's going to end up having to pay the balance, so, that is an example of a true serious conflict, and either it has to be resolved before the case is filed, or they're gonna have to get separate lawyers for the Chapter 7
Let's talk about chapter 13, if someone is about to go through a divorce, there's no reason to file a Chapter 13 together, because Chapter 13, typically runs for 3 to 5 years, and in almost every divorce case, people are trying to move on, and get a new start with their life, there's no need to be bound together in the same case. Now, another question we often have, is somebody's in the middle of Chapter 13 and they filed everything, was going great, now, they're getting a divorce, what happens?. Well, again, if there is ever if there's ever any conflict, that arises between the husband and wife, they're gonna have to fire the attorney.
The attorney is gonna have to quit the case we have had situations, where people have worked it out and they've continued to have the same bankruptcy attorney threw their case, even though they do get a divorce, but you must understand, if there is a conflict, if something arises, then, you know, we have a serious problem, let me give you an example for a Chapter 13.
Let's say you're in chapter 13, and the husband wants to quit the case, he's sick of it the wife doesn't, because, let's say, there's some asset that's being paid, that she wants to keep, well, the bankruptcy attorneys not just going to be able to dismiss the case, he's gonna have to withdraw from the case, and that spouse that may have the Chapter 13 payment coming out of their paycheck, they're going to need to meet with another attorney, and that new attorney is going to have to do that, because that, the bank the bank's returning the first case has a duty of loyalty to both, and they can't take any action against one, that might hurt the other, so banking divorce is a very complicated situation, but if you have any questions I hope you'll check out my website it's www.kellycanhelp.com or you can give me a call at (706)295-0030.
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