Divorce: When a Spouse or Former Spouse Files Bankruptcy

Understanding the Impact of Bankruptcy on Domestic Support Obligations, Property Settlements, and Taxes

Recording of a 90-minute CLE video webinar with Q&A

This program is included with the Strafford CLE Pass. Click for more information.
This program is included with the Strafford All-Access Pass. Click for more information.

Conducted on Tuesday, July 20, 2021

Recorded event now available

or call 1-800-926-7926
Course Materials

This CLE course will review the unique powers of bankruptcy law to alter or affect the financial plans and goals of divorced or divorcing spouses when bankruptcy is commenced before, during, or after a divorce.


Counsel must address a dizzying array of factors and combinations of factors when divorce and bankruptcy intersect. The factors include when to file and in what order; what chapter to file; whether bankruptcy occurs before or after the division of the property; whether the case is joint or solo; whether claims of third-party creditors are involved; and whether either proceeding requires the sale of a business and business interests held by only one spouse.

Bankruptcy courts can override the divorcing parties' intentions and reasonable expectations for the benefit of third-party creditors. The bankruptcy court can recharacterize support as property division and loans as equity--or vice versa--with significant consequences.

Property that can satisfy creditors in bankruptcy is difficult to determine, varies in community property and equitable division states, and turns on which chapter of bankruptcy is filed, exemptions allowed, and even residency. The law is unsettled and fact-specific for many financial assets, such as education savings accounts, pre-paid tuition, net operating losses, and other tax attributes.

Listen as this panel of experienced bankruptcy and family law attorneys discusses best strategies for achieving the parties' financial goals when divorce and bankruptcy are factors.



  1. Bankruptcy provisions that matter the most
    1. Definitions relevant to divorce counsel
    2. Automatic stay: What is it, and when does it apply?
    3. Recharacterization
    4. Exemptions
    5. Avoidance powers
    6. Discharge
  2. Differences between Chapter 7 and Chapter 13
  3. Chapter 11 and Subchapter V issues
  4. Tax issues


The panel will review these and other key issues:

  • Sequencing divorce and bankruptcy
  • Domestic support obligations
  • Automatic stay
  • Tax considerations when a spouse or former spouse files bankruptcy
  • Provisions to include in the property settlement agreement relating to bankruptcy


Bagley, Martha
Martha R. Bagley

Weston Patrick

Ms. Bagley provides domestic relations, probate and business clients with comprehensive legal services including...  |  Read More

Steiner, Eric
Eric S. Steiner, Esq.

Managing Member
Steiner Law Group

Mr. Steiner has helped business and consumer clients throughout Maryland discharge millions of dollars of debt. His...  |  Read More

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