ARIZONA BANKRUPTCY AND FAMILY LAW

Family Law Exceptions to the Automatic Stay

One of the biggest benefits of filing bankruptcy is the Automatic Stay, a legal mechanism that protects you from garnishments, repossessions, etc., by your creditors while your bankruptcy is active. Stopping a wage garnishment for months or even years will help you get back on your feet, and the garnishment will be halted permanently if the associated debt is discharged in your bankruptcy. However, there are some exceptions to the Automatic Stay, including that many garnishments that stem from domestic obligations that are exempt from its protections.

If your wages are garnished to pay your child support or spousal maintenance, these will continue in both a Chapter 7 and Chapter 13 bankruptcy. If you are being garnished for support arrearages, these will continue in a Chapter 7. Garnishments for unpaid support will stop in a Chapter 13 if your plan provides for your entire unpaid balance to be resolved.  Contact an experienced Arizona Bankruptcy and Family Law attorney for assistance.

HOW CAN WE HELP?

Consult with the expert bankruptcy legal team if you are faced with:

Harassing phone calls from creditors

Loss of a job or wages

Making monthly bill payments

Crushing credit card debt

A wage garnishment

A reposession

A foreclosure

Medical debt

Clients who call upon our services have overwhelming debt caused by life circumstances. We understand that Arizona residents are faced with difficult financial situations that result in debt. We are here to help you get out of debt, and our team will be with you throughout the bankruptcy process.

When a Bankruptcy Filing in Arizona will Stop a Family Law Case

The Automatic Stay protects you during bankruptcy by freezing your assets, but this can complicate things in a divorce. One of the vital components of a divorce that must be completed before the divorce can be finalized is property division. Both assets and debts acquired by the spouses will be split during property division. A bankruptcy will interrupt your divorce unless there are no assets and debts to divide between the spouses, which is a rare occurrence.

If you and your spouse intend to divorce but can agree upon property division, an Arizona bankruptcy filing won’t interrupt other divorce issues like child support and custody. If you are in an active bankruptcy, this won’t prevent you from addressing family law issues like domestic violence, establishing paternity, or parenting time modifications.

Family Court Proceedings and Debts in Bankruptcy

Deciding how debts should be divided between spouses can be one of the most contemptuous issues in a divorce. Depending on the structure of your debts, it may be advantageous to file bankruptcy first. You may even have an easier time qualifying for Chapter 7 after your divorce, or your Chapter 13 plan payments may be lower. A Chapter 7 bankruptcy will halt your divorce proceedings for the length of your bankruptcy case, typically 4-6 months. Divorcing during a Chapter 13 is impractical as the bankruptcy will last 3-5 years, and your payment plan will be formulated based on your status as a married couple.

You should consult with a bankruptcy attorney to determine if your bankruptcy should be filed before or after your divorce. It is important to understand that bankruptcy and family law, though 2 separate types of law, often cross paths. Contact our Arizona Bankruptcy and Family Law attorneys for a free consultation.

Does the Automatic Stay stop the collection of ongoing Child or Spousal Support?

Filing bankruptcy doesn’t excuse you from your familial obligations. Your child and spousal support payments will continue as usual during your bankruptcy, despite the Automatic Stay being in place.

How Does Bankruptcy Impact Child Support Payments in Arizona?

Child support can be garnished at far higher rates than other debts in Arizona, and your garnishment may not be stopped by the Automatic Stay when you file bankruptcy. Most debts that are discharged in bankruptcy can garnish your wages at a rate between 15 and 25 percent. Your wages can be garnished for child support by up to 50% if you have no other dependents, and 60% if you do. An additional 5% is garnished if the obligor is behind on payments by 12 weeks or more.

If you are being garnished at the state maximum levels for child support, filing Chapter 7 will only help you by discharging your other unsecured debts. Your garnishment will not pause during your bankruptcy, and the child support debt will remain after your other debts have been discharged. It may be preferable to file Chapter 13 in this situation. Your ongoing support payments will continue as usual, but your garnishment will stop if your plan arranges for payment of all of your arrearages.