When a spouse files for bankruptcy, the state will temporarily suspend the proceedings for the divorce. This is known as an automatic stay. The stay also stops creditors from calling at all hours. However, it does not apply to debts such as child support or alimony. These debts have a higher priority under the Bankruptcy Code.
Will Filing for Bankruptcy Stop Civil Lawsuits?
If the automatic stay is lifted, the spouse filing for bankruptcy can proceed with the divorce. Bankruptcy is a common reason for divorce in NJ. Bankruptcy and divorce may occur simultaneously, and people may wonder how to proceed while the two are interrelated. It is best to consult a NJ bankruptcy and divorce attorney for more information.
The automatic stay will prevent creditors from collecting any debts from the spouse filing for bankruptcy. This may be helpful if a spouse is trying to pay off a debt but can also be problematic if the other spouse is trying to file for bankruptcy. In that situation, a NJ divorce attorney can file a motion with the federal court to lift the automatic stay.
Bankruptcy and divorce are complicated processes. Not all assets are treated the same in a bankruptcy court, and the right bankruptcy must be tailored to the individual situation. In addition, a bankruptcy attorney will advise on how to protect your assets and family during a divorce.