Thursday, 08 June 2017 13:27

When a Spouse Files Bankruptcy to Get Out of Debt Allocated in the Divorce

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Late last year the Arizona Court of Appeals ruled on a case in which the former husband filed for bankruptcy one month after the Family Court entered his divorce decree dividing the former wife's pension and a substantial amount of community debt.  People often consider filing for bankruptcy after their divorce or worry that their former spouse may file bankruptcy.  This case directly addressed the subject.

 

The Family Court evenly divided the former wife's pension and ordered each party to pay one-half of the wife's student loan debt, and allocated about $15,000 in credit card debt among the parties.  The former husband then immediately filed for Chapter 7 bankruptcy relief and received a discharge as to all of the debt.  The former wife then filed to set aside the Family Court's decree and to re-allocate her pension.  The trial court set aside the decree and awarded the former wife 100% of her pension because she was now stuck with all of the debt.

 

The Court of Appeals affirmed the trial court's ruling using the abuse of discretion standard, which means that if the trial court's ruling is consistent with the law and if there is an evidentiary basis for the ruling, then the appellate court will not disturb the trial court's ruling.  You can review the Court of Appeals Decision here: http://law.justia.com/cases/arizona/court-of-appeals-division-one-unpublished/2016/1-ca-cv-15-0540-fc.html

Read 700 times Last modified on Thursday, 08 June 2017 13:42

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