What is bankruptcy? What is divorce? What is the relationship between bankruptcy and divorce in Virginia?
A bankruptcy is a case or legal proceeding in federal court in which a debtor seeks protection from his or her creditors and an adjustment or discharge of his or her debts. A debtor may initiate a voluntary bankruptcy case or the creditors of a debtor may initiate an involuntary bankruptcy case. Often, a debtor initiates a bankruptcy case when he or she is insolvent, unable to pay his or her bills as they become due, or has lost control of property, through a garnishment, attachment or judgment lien, or is about to lose property to a repossession or foreclosure sale or trustee’s sale. In a straight bankruptcy or chapter 7 proceeding, the debtor agrees to give up his or her nonexempt property for sale by an appointed trustee in return for a discharge of his or her dischargeable debts. In a plan bankruptcy under chapter 11, chapter 12, or chapter 13, the debtor pays part or all of his or her debts through a plan confirmed by the bankruptcy court. The most common plan bankruptcy is chapter 13, also known as a wage earner plan or the adjustment of the debts of an individual with regular income, which is available to individuals with regular income and a limited amount of unsecured debt and secured debt. The chapter 13 plan lasts from three to five years. After completing the plan, the chapter 13 debtor received a discharge of his or her debts. It is often filed by a homeowner who is facing foreclosure and wishes to keep his or her home and pay back the arrearage amount over a three to five year period.
A divorce is a case or legal proceeding in state court terminating the legal relationship of marriage and resolving the legal incidents and consequences of marriage, which may include liability for spousal support, rights to inheritance, interests in marital property, and liabilities for marital debts. A divorce may also address the custody, visitation, and support of children born or adopted of the marriage. In Virginia, a man and a woman, or a same sex couple, can enter into contracts, before marriage or during the marriage or separation, governing their legal responsibilities and liabilities arising from the marriage. The agreements, which are variously known as premarital agreements, antenuptial agreements, marital agreements, separation agreements, property settlement agreements, or marital stipulations, can be enforceable just like any other contract if certain legal requirements are met. Although a man and a woman, or a same sex couple, can enter into a contract governing the incidents their relationship as husband and wife, the parents of a child cannot ultimately bind a court to a contract controlling the custody, visitation and support of a child, because Virginia has an interest in the well-being and best interests of children within its jurisdiction. Virginia has two types of divorces: a divorce from bed and board and a divorce from the bond of matrimony. A divorce from bed and board – a divorce a mensa et thoro – is literally a divorce from bed and table. It recognizes that the parties are now legally separated, but does not allow the parties to remarry. A divorce from the bond of matrimony – a divorce a vinculo matrimonii – is a full and final divorce from the bond of matrimony allowing the parties to remarry. A divorce from bed and board may be granted only on fault grounds, while a divorce from the bond of matrimony may be granted for fault or no fault grounds, usually a one year separation, or a six month separation, if there are no minor children and the parties have entered into a written separation agreement.
Bankruptcy and divorce are related to each other because they are both primarily concerned with finances, assets, property, liabilities, and debts. The marital relationship gives rise to interests in property and liabilities for support and contribution for debts. A marriage creates certain efficiencies in financial arrangements which are disrupted or destroyed by a separation of the spouses. Maintaining two households is usually considerably more costly than maintaining one household. In Virginia, marriage is viewed as an economic partnership in which the parties are entitled to share in their joint efforts and support. A husband or wife may make financial sacrifices in reliance on the continued existence of that marital partnership. Consequently, a spouse may be financially vulnerable if and when the marriage dissolves.
Bankruptcy and divorce are not strangers in Virginia. Unfortunately, financial difficulties often lead to marital difficulties, and marital difficulties often lead to financial difficulties. A bankruptcy can result in a divorce, and a divorce can result in a bankruptcy.
You should consult with your Virginia bankruptcy and divorce lawyer, or Richmond bankruptcy and divorce lawyer James H. Wilson, Jr., to discuss the relationship between a potential or ongoing bankruptcy or divorce in Virginia.