Gitlin Law Blog

Bankruptcy Part II

Q: What are the different types of bankruptcy and what is the relevance to divorce cases?
A: Individuals can file for bankruptcy under Chapter 7 or Chapter 13.  Chapter 7 is a total discharge of debts whereas Chapter 13 is a repayment plan allowing the debtor to make payments over the course of time (5 years in many cases) and then have remaining debts discharged.  The type of bankruptcy (7 or 13) affects which debts can be discharged, if and when debts will be discharged, and the contents of the bankruptcy estate.  In relation to divorce, one difference is that property settlements contained in a divorce judgment (Marital Settlement Agreement) are no longer dischargeable under Chapter 7, but are dischargeable if certain conditions are met under Chapter 13.

Q: My ex-spouse just filed for bankruptcy.  Will this affect his obligation to pay child support and maintenance?
A: No.  In fact, child support and maintenance (referred to as domestic support obligations in the bankruptcy statute) receive priority treatment.  Therefore, under Chapter 7 property is first distributed to fulfill the support obligation, and under Chapter 13 the support obligation must be paid in full during the bankruptcy proceedings.  Under the new bankruptcy law, failure to pay current support obligations in full can result in denial of a discharge under Chapter 13.

Q: When my ex-husband filed for bankruptcy, he owed a substantial amount of child support.  How and when can I collect the past-due child support?
A: Support obligations, such as child support, are not dischargeable under Chapter 7 or Chapter 13.  The bankruptcy will not affect your ability to collect past-due support, but the automatic stay may prevent you from attempting to collect pre-bankruptcy-petition past-due child support from property in the bankruptcy estate, and a debtor’s income is part of the bankruptcy estate in a Chapter 13 bankruptcy.

 

Change of Child Custody

Q:  Isn't child custodoy always decided on the basis of what is in the best interest of the child?

A:  No.  the first question in a transfer of custody is not what is in the best interest of the children, but whether there has been a change of circumstances since the original custody order was entered.

Look at it this way.  After child custody is determined by a court order in divorce or paternity proceedings on the basis if the best interest if the child, the judge, in effect, states, "That's it.  I determined the custody of the child once and that was done on the basis of waht is in the best interest of of the child. (And this holds true whether the judge's determination was based on a trial, or the parties' agreement.)  Now, if you want custody changed, you are going to have to show me (the judge) there has been a change of circumstances."

Q:  Does the law have a bias in favor of the custodial parent and against the non-custodial parent?

A:  Yes.  It is a strong bias.  The law has a bias in favor of the child's life being stable.

Q:  What facts would be sufficient to show a change of circumstances sufficient to bring about a change of custody?

A:  Examples are:  a significant drop in the child's school performance; significant health problems due to the custodial parent's neglect; the development of significant social/psychological problems by the child; substantial neglect of the child by the custodial parent, such as leaving the child home alone, neglecting the child so the child becomes injured; exposing the child to what the judge may consider to be immoral conduct, like having a live-in significant other.

Q:  What could other causes be for a transfer of custody?

A:  Serious abuse of a child, whether physical or sexual, may be grounds for a transfer of custody.  The instability of the custodian is frequently a significant (but not sole) factor in allowing a transfer of custody.  Imprisonment of a custodian is an obvious change of circumstances.  Smoking by the custodial parent is now being raised in change of custody proceedings.  In the Illinois appellate court opinion which addressed the smoking issue the custodian's smoking did not result in a change of custody because it was not proved that the children's asthamatic conditions were caused by the smoking and the mother testified that she no longer smoked in the residence.

For more information visit Gitlin, Busche & Stetler, Woodstock, Illinois lawyers website.

H. Joseph Gitlin covers the practice of family law in Illinois.  Mr. Gitlin is the author of Gitlin on Divorce Reports, which summarize current Illinois opinions.  Click here for Gitlin on Divorce Reports information or contact the office at (815) 338-0021.   Mr. Gitlin's book, Gitlin on Divorce, A Guide to Illinois Matrimonial Law is a necessary tool for lawyers and legal assistants involved in family law and for judges hearing matrimonial cases

Tax Questions Regarding Child Support and Alimony

Q: Can I combine child support and maintenance (alimony) and then deduct the entire amount?
A: Maybe.  This is known as unallocated maintenance and support.  The IRS, however, does not like to be finessed out of receiving taxes, and thus it is very challenging to create an unallocated maintenance and support schedule that the IRS will not challenge.  This is not a do-it-yourself kit, and also may be beyond the capacity of a lawyer who is not divorce-tax savvy.

Q: A divorce is pending and my spouse and I continue to live in the same home.  Can I pay temporary maintenance and deduct it?
A: No.  You may not live in the same household and deduct maintenance payments.

Q: What if I pay, pursuant to a court order or a written separation agreement, my spouse’s rent, the mortgage, tax liability on the residence, or my spouse’s college tuition payments?  May I deduct?
A: Yes, but the mortgage, rent payments etc. cannot be deducted if you own the residence.

Tax Questions and Divorce

Q: I am divorced and the custodial parent.  The divorce judgment does not address who can claim the children as exemptions.  Can I claim the children as exemptions?
A: Yes.   The custodial parent is entitled to the exemption if both parents supported the child.  Which parent actually paid support is irrelevant.

Q: Can I still claim the tax exemption if I signed IRS Form 8332?
A: No.  IRS Form 8332 is a statement by the custodial parent releasing the exemption.  If the custodial parent signs Form 8332, then only the non custodial parent can claim the personal exemption for the child.

Q: Can I claim the tax exemption if the marital settlement agreement or the divorce judgment allocates the exemption to my spouse?
A: No.  The party assigned the exemption in the marital settlement agreement or the divorce judgment is the only person who can claim the exemption.

Understanding Joint Custody

Q: I am a father involved in a divorce/paternity proceeding.  I heard about joint custody, but I am not sure what it is.
A: Joint custody is sort of like beauty. It is mostly in the eyes of the beholders.  The joint custody statute states that a joint custody agreement “shall specify each parent’s powers, rights and responsibilities for the personal care of the child and for major decisions such as education, health care and religious training.”  I call this type of joint custody decision making joint custody.

Q: If I get joint custody, don’t I get a break on child support?
A: Maybe, but not usually.  If you have less than equal custody and if you make more than the other spouse, the likelihood is that you will end up paying statutory child support, that is, 20% of net income for one child, 28% for two children etc.  If you have substantially equal custody, the amount you pay for child support may be somewhat discounted.  If, however, you and the other parent make substantially equal amounts and share the custody of the children substantially equally, there may be a wash, that is, neither parent pays support to the other.

For more information on Illinois divorces, please visit Gitlin, Busche & Stetler:  McHenry County Illinois Divorce Lawyers. 

H. Joseph Gitlin covers the practice of family law in Illinois.  Mr. Gitlin is the author of Gitlin on Divorce Reports, which summarize current Illinois opinions.  Click here for Gitlin on Divorce Reports information or contact the office at (815) 338-0021.   Mr. Gitlin's book, Gitlin on Divorce, A Guide to Illinois Matrimonial Law is a necessary tool for lawyers and legal assistants involved in family law and for judges hearing matrimonial cases

Income Tax Consequences of a Divorce

Q: Where else can I go to find answers to my tax questions?
A: The IRS has a website at www.IRS.gov.  Publication 504 provides additional guidance for divorced or separated individuals.

WARNING:  The income tax consequences of a divorce, especially one involving substantial income and/or substantial assets, are legally complex.  You should receive advice from a lawyer who is divorce-income tax knowledgeable, or an accountant.

Attorney Michael Stetler of Gitlin, Busche & Stetler strives to achieve the best possible post-tax results for clients through effective asset selection and tax consequence arbitrage.  He enjoys working with financial documents, understands and can speak effectively with numbers.  His background in taxation and accountancy brings a welcome perspective to Gitlin, Busche & Stetler.

WINNING

 

FACTS WIN, NOT LAWYERS

 

The best lawyer in the community will not win a case with bad facts.  A mediocre lawyer will win a case with good facts.

J

Custody Nomenclature

Q: What type of nomenclature do parents become hung up over?

A: Common problems are a lack of understanding of terms like:

• Sole Custody
• Residential Custody
• Joint Custody
• Parenting Time

Q:  What differences are there between these terms?

A:  Nomenclature makes very little difference.  The opinions of American courts of review have frequently stated that titles given by two items do not matter and what matters is what was actually meant.  This is another way of saying, "If it looks like a duck, quacks like a duck, and walks like a duck, it is a duck."  In my book, there are only two terms that count:  custody and visitation.  The parent with whom the child stays overnight the most nights is, to me, the parent who has custody.  The other parent has visitation.

 

For more information on child custody visit Gitlin, Busche & Stetler, Woodstock, Illinois lawyers website.

H. Joseph Gitlin covers the practice of family law in Illinois. Mr. Gitlin is the author of Gitlin on Divorce Reports, which summarize current Illinois opinions.  Mr. Gitlin's book, Gitlin on Divorce, A Guide to Illinois Matrimonial Law is a necessary tool for lawyers and legal assistants involved in family law and for judges hearing matrimonial cases.

Modification of Custody

Q: We have "joint custody," with the mother being the residential parent/primary custodian. Doesn*t the joint custody give the father a leg up in gaining residential custody?
A: No. The joint custody does not give the father any advantage.

Q: I originally agreed my husband could have custody, but now my circumstances have greatly improved so that it would be in the best interest of my child to be in my custody. Will I win?
A: Gitlin, Busche & Stetler has been involved in cases where a young parent gives up custody because she does not want the responsibility of raising the child. Some years later she becomes more mature, has made an economically fortunate marriage and she is now ready for parenthood. The modification of child custody statute is, however, specific in stating that the required change of circumstances must be on the part of the child, or the parent having custody, that is, a change of circumstance on the part of the non-custodial parent will not bring about a change of custody.

For more information visit Gitlin, Busche & Stetler, Woodstock, Illinois lawyers website.

H. Joseph Gitlin covers the practice of family law in Illinois.  Mr. Gitlin is the author of Gitlin on Divorce Reports, which summarize current Illinois opinions.  Click here for Gitlin on Divorce Reports information or contact the office at (815) 338-0021.   Mr. Gitlin's book, Gitlin on Divorce, A Guide to Illinois Matrimonial Law is a necessary tool for lawyers and legal assistants involved in family law and for judges hearing matrimonial cases. 

Uniform Child Custody Jurisdiction Enforcement Act

Q: What is the Uniform Child Custody Jurisdiction Enforcement Act?
A: The Uniform Child Custody Jurisdiction Enforcement Act (UCCJEA) is state law that sets fourth very specific rules regarding which state court will make the ultimate decision in regard to custody disputes between parents when the parents reside in different states. The UCCJEA is also in place to enforce prior custody determinations and to create ways for courts in different states to communicate with each other in making custody determinations.

The UCCJEA went into effect in Illinois on January 1, 2004 and replaced the Uniform Child Custody Jurisdiction Act (UCCJA).