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Ex-Spouse's Claim Allowed in Bankruptcy

Posted By admin || 13-Sep-2009

In the bankruptcy case of White, Terry P.; In re, the bankruptcy court overruled a debtor's objection to his ex-wife's claim.

The details of the bankruptcy case:

"When the debtor and his wife divorced, he received the family home and was ordered to pay his wife $30,000 out of the proceeds from the property's sale. She received a lien against the property to secure that obligation. The divorce decree placed no restraints on the cash award and made no provisions for altering it.

After the debtor filed for Chapter 13 relief, his ex-wife filed a secured claim for $6,800, which was the unpaid balance of the $30,000 obligation. She asserted that her claim was for alimony. The debtor objected. The court over­ruled the objection. Although the court agreed with the debtor that the obligation was not for domestic support, the court found that the claimant held an unavoidable judicial lien that was enforceable against the debtor even though it was not perfected."

This bankruptcy case is another example of how divorce and bankruptcy often remain intertwined long after the divorce decree has been finalized.  Before filing bankruptcy it is important to identify any possible outstanding obligations to a former spouse.  If a spouse has a lien against your property it may be difficult to avoid the claim, which was the case in this debtor's bankruptcy case.

Also, if a debtor owes child support, it is a priority debt and cannot be discharged in bankruptcy.  Please take the time to identify these possible trouble points and make your bankruptcy attorney aware of the situation before you file bankruptcy so that proper pre-bankruptcy planning can be made. Providing your bankruptcy attorney with accurate and timely information can help him/her maximize the benefits you receive from filing bankruptcy.

Source: Consumer Bankruptcy News, Volume 19, Issue 18, page 18

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