Bankruptcy issues are arising more often in divorce cases. It is important that a divorce attorney have experienced, competent bankruptcy attorneys to turn to when these issues arise. However, the divorce attorney needs to have at least a basic understanding of bankruptcy law to properly identify these issues. One issue was recently addressed by the 4th Circuit Court of Appeals in Johnson v. Zimmer (No. 11-2034, July 11, 2012 ). Often, divorcing spouses are jointly liable for various debts, such as credit cards for example. If one spouse files bankruptcy, the obligation to pay that debt may fall wholly on the other spouse. In this case, the former spouses were jointly liable on some unsecured debts. Former wife filed a Chapter 13 bankruptcy petition which would allow her to keep her property but agree to a court-approved plan under which she pays creditors out of her future income. She submitted to the court a plan that included her income and expenses. She included in the plan expenses for the parties’ two children (who resided with her 204 days out of each year) and the expenses for her three stepchildren (who resided with her and her new husband 180 days per year). She claimed that these five children should be considered as full dependents for the purpose of determining her expenses. In other words, she claimed that her household consisted of seven individuals (her, her new husband, her three stepchildren, and her two children).
The bankruptcy court in effect “split the babies” and ordered that they would be considered only partial dependents based upon the number of nights they spent with the respective parents. Therefore, each of her two children were considered partial dependents calculated as follows (204/365 = .56) and her three stepchildren were considered partial dependents calculated as follows (180/365 = .49). Therefore, her total dependents were [( .56 x 2) + (.49 x 3)] = 2.59. The Fourth Circuit Court of Appeals accepted the trial court’s decision.
As with any other issues arising from your separation or divorce, you should discuss these issues with a North Carolina Family Law Specialist. Feel free to contact me, Monty Beck, Western North Carolina Family Law Specialist to discuss these issues.