Divorce and bankruptcy are two highly stressful and emotionally charged processes that individuals often find themselves going through. The complexity and overwhelming nature of experiencing both simultaneously can feel daunting. So, if you’re in the midst of a divorce and also considering bankruptcy in North Dakota, you might be wondering how it will impact the division of your property.
Understanding North Dakota’s Property Division Laws
The foundation of property division in North Dakota is the principle of equitable distribution. This means that the court will strive to divide the marital property in a manner that is fair and just, even if it’s not necessarily equal. Several factors are taken into consideration during this process, including the length of the marriage, the income and earning potential of each spouse, the contributions each spouse made to the marriage, as well as the current and future needs of both parties.
Implications of Bankruptcy on Property Division
Once you file for bankruptcy, your assets become part of the bankruptcy estate, and the court appoints a trustee to oversee your bankruptcy case. The trustee’s role is to liquidate any non-exempt assets you have in order to repay your creditors. This means that if you possess assets that are not exempt, they will be sold, and the proceeds will be distributed among your creditors.
The Automatic Stay Provision
Upon filing for bankruptcy, an automatic stay provision comes into effect. This provision dictates that all collection activities against you, including divorce proceedings, must be halted. The stay remains in effect until the bankruptcy case is settled or until a court decides to lift the stay.
Chapter 7 Bankruptcy: Impact on Property Division
In Chapter 7 bankruptcy, your non-exempt assets are sold off, and the proceeds go towards repaying your creditors. Once your bankruptcy case is concluded, any outstanding debts are discharged, offering you a fresh start from a financial perspective.
If you decide to file for Chapter 7 bankruptcy while concurrently going through a divorce, the trustee gains the authority to liquidate any non-exempt assets you own. The trustee will sell these assets, and the resulting funds will be utilized to satisfy your outstanding debts. This course of action can potentially impact the property division process in your divorce proceedings. For instance, the trustee may sell a vacation home that is not exempt, and if that home is considered marital property, your spouse would be entitled to a portion of the proceeds obtained from the sale.
Chapter 13 Bankruptcy: Impact on Property Division
Chapter 13 bankruptcy involves designing a repayment plan to manage your debts over a period of three to five years. You retain possession of your assets during this time, as the trustee does not liquidate them. Once you successfully complete your plan, any remaining debts are discharged.
Opting for Chapter 13 bankruptcy during a divorce can also influence the property division process. The bankruptcy court may require a portion of your income to go towards repaying your debts, which can subsequently affect the amount of spousal or child support you are obligated to provide.
Wrapping Up
Dealing with both a divorce and bankruptcy simultaneously can be intricate and overwhelming. Enlisting the guidance of a skilled attorney well-versed in both bankruptcy and divorce law is crucial when navigating these complex processes. If you’re contemplating filing for bankruptcy during a divorce proceeding in North Dakota, it’s crucial to reach out to an attorney experienced in these matters. They can provide valuable advice and explore the options available to you.