By Attorney Brandy J. Thompson
Divorce and bankruptcy are very stressful legal experiences in a person’s life. Unfortunately, some people find themselves experiencing them at the same time. If you are juggling both cases in Mid-Michigan, whether you live in Lansing, Jackson, Charlotte, St. Johns, or Ionia, understanding how these cases interact with each other can help protect your rights, your property, and your financial future.
Michigan Law: Where Divorce and Bankruptcy Intersect
Divorces in Michigan are governed by state law and handled by the family division of our circuit courts, while bankruptcy is governed by federal law and handled by the U.S. Bankruptcy Court for the Western District of Michigan. Even though these courts operate independently from each other and under different laws, one can significantly impact the other in terms of dividing marital property and debt under Michigan’s equitable distribution statute, MCL 552.401, and the principles outlined in Sparks v. Sparks, 440 Mich. 141 (1992).
Key Considerations for Mid-Michigan Families
1. The Importance of Timing: Divorce First or Bankruptcy First?
Timing and the unique circumstances of each case matter. For some, it would make sense to file for bankruptcy first, especially if both spouses agree to a joint Chapter 7 filing to eliminate shared debt. For others, filing for divorce first is best because it can help protect non-exempt assets or because only one spouse carries most of the debt.
An experienced family law attorney in Mid-Michigan can help you determine what is best based on your specific circumstances.
2. How Bankruptcy Affects Divorce Proceedings
If one or both spouses file for bankruptcy before or during the divorce, the federal court will issue an automatic stay that will temporarily halt the divorce process with regard to the division of property. Once the bankruptcy is resolved, the divorce court must reassess how the remaining marital debt and assets are to be equitably distributed.
3. Protecting Assets During a Divorce and Bankruptcy
There are certain exemptions you can claim during bankruptcy, such as some equity in your home and personal vehicle, a certain amount of household items, and retirement accounts. In high-asset divorces, these exemptions can be crucial to keeping the equity in your home or preserving retirement savings.
4. Dischargeable vs. Non-Dischargeable Debts
Federal law (11 U.S.C. § 523(a)(5)) makes child support and spousal support obligations non-dischargeable in bankruptcy. Some types of obligations that are fully or partially dischargeable are certain unsecured debts like credit card balances, personal loans, and certain medical bills. If you’re paying or receiving child or spousal support in Ingham, Clinton, or Ionia counties, bankruptcy will not reduce or eliminate those.
Trusted Legal Guidance in Mid-Michigan Divorce and Bankruptcy Cases
If you’re facing divorce and bankruptcy in Lansing, East Lansing, Charlotte, St. Johns, Jackson, or Ionia, the decisions you make now can shape your financial future for years to come. Working with attorneys who understand both Michigan divorce law and federal bankruptcy law is essential.
At The Kronzek Firm, we help clients across Mid-Michigan protect their assets, navigate complex legal decisions, and emerge with a stronger financial outlook. We’re familiar with the intersection of these two legal processes in the Ingham, Eaton, Jackson, Clinton, and Ionia County Circuit Courts.
📞 Our attorneys have helped thousands of Michigan clients since the last century. You can reach our Lansing office 24/7 at (517) 886-1000. You can also email our legal team at contactus@kronzek.law during weekends and evenings.
[Disclaimer: This content is for informational purposes only and does not constitute legal advice. Consult an experienced attorney for very specific guidance.]