When it comes to marital arguments, money (or the lack thereof) often tops the list -- so it's no surprise that bankruptcy court and divorce court often intersect. However, until recently, bankruptcy judges were prohibited from deciding other types of cases, even when these cases had to be litigated before the bankruptcy matter could proceed. A recent Supreme Court decision could significantly alter this practice by allowing bankruptcy judges to decide other types of cases that come before them in certain situations. Read on to learn more about this change in the law and how it may impact your bankruptcy case.
When can bankruptcy judges hear other matters?
Traditionally, bankruptcy judges have been prohibited from hearing or deciding matters not specifically contained within the bankruptcy petition. For example, if someone is seeking a discharge of debts in a Chapter 7 bankruptcy but is awaiting the settlement of an inheritance which may provide additional income to pay off debts, the bankruptcy judge may either stay the bankruptcy case pending the settlement of the estate or simply grant the bankruptcy discharge. The judge is not permitted to settle the inheritance, even if doing so would significantly shorten and streamline both court processes.
The United States Supreme Court recently decided a case that changed this practice, now permitting bankruptcy judges to hear other related matters as long as all parties involved consent to this consolidation. This marks a major change in court procedures, particularly since bankruptcy cases are federal and many other matters (including most divorces) are litigated on a state basis.
Can a bankruptcy judge hear and decide your divorce case?
Divorce law is complex, and most bankruptcy judges don't have extensive training in this area. For this reason, even if both you and your ex-spouse consent, it's unlikely you'll be able to begin and end your divorce case in the bankruptcy courtroom. However, the bankruptcy court may be able to determine or enforce certain financial or other divorce matters that impact your bankruptcy case.
For example, if you and your ex-spouse are battling over the division of non-dischargeable debt (like student loans incurred during marriage) or protected assets, the bankruptcy judge may be in a unique position to evaluate the issues and their effect on your bankruptcy case, and make a final ruling with this matter in mind. The bankruptcy judge may also be able to enforce certain divorce orders, such as requiring you or your ex-spouse to quit-claim an interest in your marital home. If you have financial issues from a pending or recently finalized divorce, you and your ex-spouse may wish to ask the bankruptcy court to consolidate these matters.
For more information, contact a bankruptcy attorney in your area.