Gitlin Law Blog

Bankruptcy, Part III

Q: My marital settlement agreement/divorce judgment requires my ex-spouse to pay certain debts incurred during the marriage.  Can he avoid liability for these debts by filing bankruptcy and will I become liable for these debts?
A: Obligations assumed in a divorce are not dischargeable under Chapter 7.  Therefore the debtor cannot avoid liability for these debts.  These debts, however, may be discharged under Chapter 13 if the debtor complies with the payment plan and has paid all support obligations in full.  Therefore, you may become liable for these debts despite the marital settlement agreement and the divorce.

Q: My marital settlement agreement/divorce judgment requires my ex-spouse to make payments to me as part of the property distribution.  How will these payments be affected if he files for bankruptcy?
A: These obligations are treated the same as the assumption of debts in a divorce.  Under Chapter 7, your former spouse cannot avoid these obligations, but may be able to avoid the obligations under Chapter 13 bankruptcy.

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.

 

Divorce & Bankruptcy Part I

Q: If I am contemplating filing for both divorce and bankruptcy, should I file one or the other first?
A: If you and your spouse have substantial debts, it may make sense to complete a joint bankruptcy before completing a divorce.  By discharging debts before completing the divorce, you can simplify the division and distribution of the marital property and avoid problems of possible future liability from debts assigned to your spouse in the event of his or her bankruptcy.  However, the decision is not necessarily an either-or choice.

Q: I’m in the middle of divorce proceedings and my spouse just filed for bankruptcy.  How will this affect the divorce proceedings?
A: When a party files for bankruptcy, an automatic stay becomes effective.  A bankruptcy estate is also created.  The estate includes all non-exempt property of the party petitioning for bankruptcy.  The automatic stay does not affect custody and visitation disputes or divorces except to the extent that division of bankruptcy estate property is at issue.  The divorce court does not have authority to divide property in the bankruptcy estate.  The divorce court retains authority to determine custody, visitation, child support and maintenance.  Therefore, bankruptcy proceedings can stall or delay the division of property in divorce proceedings.

Q:  How long does the automatic stay last?
A: Generally the automatic stay remains in place until the debtor receives a discharge in the bankruptcy case.  However, there are other significant limitations on the automatic stay which a debtor, or anyone seeking to avoid the automatic stay, should discuss with a bankruptcy attorney. 

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

Modification of Judgments

Q: Can maintenance be increased merely on the basis that the obligor is making more money now?
A: No.  In theory the original maintenance award was made in order to allow the receiving spouse to enjoy the same economic lifestyle after the divorce as she had during the marriage.  She is not entitled to a maintenance increase to live beyond that level merely because her former husband is now enjoying a higher lifestyle.

Q: If I can prove that it would now be in the best interest of my children for the judge to transfer custody to me will the judge do so?
A: No, not based on what is in the best interest of the child.  The best interest of the child is the standard by which the court awards an original grant of custody.  But for a modification (transfer) of custody, as in child support modification, you must first prove a change occurred in the circumstances of the child, or the custodian and that those changes have had an adverse effect on the child, plus thereafter proving that it would be in the best interest of the child to transfer custody.  In addition, during the first two years after the divorce judgment is entered, you must establish that the “child’s present environment may endanger seriously his physical, mental, emotional health.”  This is very difficult to establish.

What is Surrogacy?

In traditional surrogacy the egg of the surrogate is fertilized by the intended father’s sperm through artificial insemination.  In gestational surrogacy the egg of the surrogate is not involved.  She is merely the gestator for the embryo (fertilized egg) which has been transferred into her uterus.  The egg and sperm are fertilized in vitro, the so called test tube.  The positions of most states, as detailed below, are not friendly to surrogacy.

For more information on surrogacy, 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. 

Can I Reduce Child Support in a Bad Economy?

In the present recessionary economy people who are obligated to pay child support and/or maintenance may suffer a restriction of income, or even job loss.  Typically what happens is that the person obligated to pay child support and/or maintenance merely stops paying, or pays reduced amounts and takes no court action to reduce the court ordered payments.  The former spouse then files a contempt petition.  Now he wants his child support reduced retroactively.

A CHILD SUPPORT AND/OR MAINTENANCE OBLIGATION CANNOT BE REDUCED RETROACTIVELY, except to the date of filing of a petition for reduction and serving notice of that petition on the other party.  If you are out of work or your income has been reduced substantially you should contact a lawyer immediately.

J

Visitation

(For the purpose of this Q&A it is assumed the mother is the child’s custodian because this is the usual case.)

Q: The mother tells me I cannot visit until I am current in my child support payments.  Is she right?

A: No,  absolutely not.  The law specifically states child support and visitation are not related.  You can enforce your visitation despite owing child support.  On the other hand, you can’t withhold child support because you are not receiving visitation.

Q: Can visitation be withheld because the children say they do not want to visit?                       

A: No.  A child and the custodian must obey the court ordered visitation.  There is no age at which a child can decide (until 18).  It is not an excuse to contempt proceedings against the custodian that the children do not want to visit.  In fact, it may be possible to also have older children held in contempt.  But there should be a common sense approach; the visitation should be made enjoyable for the children, and especially as children grow older the father should allow for the fact that the children will sometimes have commitment which interfere with visitation.

Q: What visitation is customarily ordered by the court, or agreed upon by the parents?                

A: (1) Alternating weekends starting Saturday morning, to Sunday evening; or sometimes from after school/work Friday with a return to school/home Monday morning.

 (2) Alternating legal holidays; split or alternating Christmas and spring holidays; special arrangements for Christmas Eve, Christmas Day and children’s birthdays.

 (3) Not less than two weeks during the summer, but in exceptional cases, a substantial part of the summer vacation.

Q: What is the most effective way of enforcing visitation?                                                

A: Contempt of court proceedings.  Contempt of court can be punished by imprisonment.  Because of the possibility of imprisonment the proceedings are somewhat technical to assure there is no imprisonment without just cause.  For this reason, it is highly advisable that both parties are represented by lawyers in contempt proceedings.

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

During the Divorce

Q: Why should I be civil to my spouse during the divorce proceedings?
A: The goal in the divorce should be to obtain a fair settlement.  Whatever is done that raises the level of antagonism works to delay and frustrate a fair settlement.  You should be as civil as the circumstances allow.

Q: Now that there is a divorce on file it’s okay to date, isn’t it?
A: Not in my book.  It is true that financial parts of the divorce are decided “without regard to marital misconduct” (which would include adultery).  The practicality is that by dating you will be rubbing salt in your spouse’s wounds and therefore making a fair settlement much more difficult and driving up the fees.  My rule is that it is okay to date as long as it is more than 500 miles from home and you have a written guarantee from God that you will not be caught.  Even in cases where the affair has been ongoing and the other spouse knows about it, I advise my client to suspend the affair during the divorce proceedings.  I want my client to be as unoffensive as possible in order to leverage the best settlement possible.

Q: How do we break the news of the divorce to the children?
A: There is no one size fits all formula.  The elements which should be included in the explanation are that each of you will continue loving the children despite the divorce and that the children were in no way at fault for their parents divorcing.  Sometimes children assume that they somehow contributed to their parents’ divorce.  While living together during the divorce proceedings the spouses should, to the extent possible, be as cordial as possible to each other because this benefits the children.

Q: What do I do about confidential papers I have, like letters from my lawyer?
A: Do not assume that your spouse will respect your right to privacy.  The best course is to have your confidential mail directed either to a trusted friend, or to a post office box.

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

 

The Second Family

Q: I have a child support obligation from my first marriage.  I remarried and had a child by the second marriage.  I am now going through a divorce.  Will my obligation for child support for the child of my first marriage be considered in determining how much child support I pay for the child of my second marriage?
A: Yes.  Child support is based on the obligor's net income.  In calculating an obligor's net income, one of the deductions from gross income to determine net income is, "Prior obligations of support or maintenance actually paid pursuant to a court order."  The result would be the same if the first order for child support was in a paternity case.

Q: What advice would you give to a second wife, or one who is about to be second wife?
A: In 1984, Glynnis Walker, a journalist and a second wife, wrote the book Second Wife, Second Best.  Her advice is, "To be forewarned is to be forearmed."  Walker's book contains interesting facts about second wives:

 * 74% of the second wives surveyed had jobs and the majority said they worked to help their husbands meet support payments to the first family.
 * 30% of second wives felt they could not afford to have their own children because they were supporting children from their husbands' previous marriage.
 * 60% of second wives said they were not prepared for the consequences of marrying men who had been married before.  In spite of this, 67% said they would do it again.

Q: If I remarry will my new wife's income have an impact on my obligation for child support?
A: Maybe.  (1) If you apply for a reduction in support because your wages are lower, but your new wife's income more than makes up for your reduced income, the court will not reduce your support obligation.  (2) Your new wife has no legal obligation for the support of her stepchildren.

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

Discovery of Hidden Assets

Q: How are hidden assets discovered?
A: The first procedure is self-help on the home front.  Any papers with dollar signs and numbers are potential clues.  The storage place for records of assets is often in the computer, or places to which the other spouse does not have easy access.  Other hiding places include the locked trunk of the car and a locked briefcase.  There are opportunities to gain access to keys.

 The second means of learning about attempts to hide assets is in the court proceedings, through what is known as “discovery”.  In discovery your spouse is required to answer written questions (interrogatories) regarding the location, transfer etc. of assets, and he is required to produce documents relating to assets.  Your reliance is not placed solely on your spouse.  For example you may ask your spouse for bank records, and receive none, but if you suspect your spouse has been doing business at a certain financial institution, you may subpoena the records of that institution.

Q: How about gaining access to data in the computer?
A: Even materials that are “deleted” from the computer can be brought up by a forensic computer consultant.  The kid next door may be your “computer consultant”, but you need the sophistication of a computer consultant who is trained in discovering data for use in court, a forensic computer consultant.

Q: What is a “paper trail”?
A: For the ownership of most valuable assets, such as real estate, stocks and bonds, accounts of money, motor vehicles etc. there is a registration, or paper record of ownership and transfer of ownership.  If A transfers a valuable asset to B, there will usually be a paper trail.  Most divorcing parties who are seeking to hide assets do not have the sophistication required to hide transactions.

Q: My spouse owns a business.  It is a corporation.  Is there an opportunity to hide assets within the business?
A: Yes, you bet.  By law the corporation is a distinct legal entity, that is, like another person.  To complicate matters there can be a primary corporation and that primary corporation can own other subcorporations.  It sometimes takes a lawyer with sophistication about corporate structures, and a forensic accountant to find the paper trail within corporations.

Q: Is there an opportunity to hide assets, or income, within a small business which is not incorporated?
A: Absolutely.  Cash is the easiest to hide and often not traceable.  There are, however, creative ways of investigating.  For example, a spouse who is a carpenter-contractor will usually buy most of his building materials from one source, for example, a lumber yard.  The records of the lumber yard in regard to this spouse’s purchases can be subpoenaed.  The records will show the site to where the materials were delivered.  The homeowner can then be subpoenaed to discover how much was paid to the contractor.  This type of investigation can also be applied to other small businesses.

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.