The Domestic Relations Exceptions to the Automatic Stay

 Posted on October 21, 2016 in Bankruptcy And Divorce

Even if you file bankruptcy certain actions can still be taken against you in divorce court, or about family law matters.

The automatic stay protection of bankruptcy stops—“stays”—the vast majority of creditor collection actions. But this automatic stay does not apply to certain very specific kinds of creditor actions. There are exceptions to this otherwise very fast and broad protection that filing bankruptcy gives you.

Our blog post a couple days ago was about the automatic stay exception for criminal proceedings. Bankruptcy does not stop, and essentially has no effect on any criminal proceeding. That’s true even though criminal proceedings often lead to criminal debts—fines, restitution, and other monetary obligations. This is a blanket exception to the automatic stay that applies to just about every criminal proceeding and criminal debt. See Section 362(b)(1) of the Bankruptcy Code.

Today we’re discussing another set of exceptions, the domestic relations (family court) exceptions to the automatic stay. These are much more limited and selective than the broad one for criminal proceedings. That is, certain kinds of domestic relations proceedings are not stopped by a bankruptcy filing, but others are.

Family Court Proceedings NOT Stopped by Your Bankruptcy Filing

Most of the kinds of family court legal proceedings that the automatic stay does not cover are very specific ones. Each of these specific exceptions to bankruptcy protection make sense. These proceedings are either urgent matters of personal safety for the ex-spouse, or deal with deeply personal matters not directly related to collecting a debt or taking an asset from you.

So, your ex-spouse, about-to-be ex-spouse, or somebody on his or her behalf, can start or continue the following limited proceedings.

• to establish the paternity of a child
• to establish or modify the amount of child or spousal support
• to resolve issues of child custody or visitation
• to address domestic violence

See Section 362(b)(2) of the Bankruptcy Code.

The Divorce Case Itself

The automatic stay also does not apply to a broader proceeding, the dissolution of marriage itself. An ongoing divorce proceeding can continue, or a new one can be filed, regardless of your bankruptcy filing.

However, the automatic stay DOES apply to and does stop what is often a crucial part of a divorce proceeding--the division of marital property and marital debt. That makes sense as well because that’s what bankruptcy deals with—property and debt. It would not be very sensible to try to deal with your property and debt in bankruptcy when those were in flux because of your divorce case.

Collection of Child and Spousal Support

The automatic stay does not stop the collection of ongoing child or spousal support. Your ex-spouse or a support enforcement agency can continue to collect by any legal means. This is true no matter what kind of bankruptcy you file.

Besides ongoing support, Chapter 7 “straight bankruptcy” also does not stop the collection of unpaid and previously accrued support arrearage. This means that under Chapter 7 your ex-spouse/support enforcement agency can start or can continue collecting all forms of support through means that can often include:

• wage withholdings
• garnishment of bank accounts
• seizure of a tax refunds
• suspension of your driver’s licenses (both regular and occupational)
• suspension of virtually all other licenses issued to you by the government, including occupational and professional licenses, and often including even hunting or other recreational licenses.

In contrast, an “adjustment of debts” Chapter 13 filing CAN stop these aggressive methods of collecting unpaid support arrearage. Collection of ongoing child and spousal support can continue, but collection of the accrued arrearage must stop.

However, this stopping of arrearage collection only stays in effect in Chapter 13 as long you strictly follow some rules. Most importantly, if you still owe ongoing support you must starts making those monthly payments right away. Your Chapter 13 payment plan must also arrange to pay the support arrearage in full over time. And you must actually make the Chapter 13 plan payments so that you do in fact pay off the arrearage during your case.