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Divorced Debtor's Interest In Marital Property Becomes Part Of Bankruptcy Estate

Posted By admin || 27-Apr-2010

moneyIn the bankruptcy case of Radinick, Kimberly A.; In re (Bohm, Trustee, v. Radinick), the bankruptcy court ruled that any interest in a debtor's es­tranged spouse's property which was awarded to the debtor in a divorce action would be property of the bankruptcy estate.

The details of the bankruptcy case:

The debtor filed for divorce and requested equitable distribution of marital assets on Nov. 28, 2006. She filed for bankruptcy protection on Sept. 16, 2008. The issues of divorce and equitable distribution were still pending when the bankruptcy court heard the Chapter 7 trustee's objection to the debtor's assertion that her interest in her estranged husband's retirement account was exempt. While it could be inferred that the debtor conceded that her interest in the account was property of the estate because she claimed it as exempt, the debtor argued that it was not. According to the debtor, because she was still married when she filed for bankruptcy, her interest in her estranged spouse's sepa­rately-titled property would be property of her bankruptcy estate only if the divorce or property settlement occurred within 180 days postpetition.

While this case took place in Pennsylvania, many Texas debtors face similar challenges. Under Texas bankruptcy law, if a divorced debtor acquires marital property within 180 days after filing bankruptcy that property will become part of the bankruptcy estate.   Not only that; but if you are married and own property/assets with your spouse, that property will be considered part of the bankruptcy estate.  However, you may be able to protect some or all of that property by using exemptions.  Please work with your bankruptcy attorney to maximize the generous amount of exemptions available to debtors under Texas bankruptcy laws.

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