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Effect of Ch. 13 filing on pending marital property division
Debtor is in the midst of an ongoing property division in state
court which is including all kinds of awards being given to the
non-debtor former spouse for things like alleged failure of the
debtor to turnover assets as part of a prior order, failure to sign
off on transfer of title of real property, etc, all of which debtor
disputes and/or has reasonable explanations. The non-debtor former
spouse is seeking another $40,000 in equalization payments from the
debtor as a result. These are not/would not be domestic support
obligations as far as I understand it.
If Debtor files a Chapter 13 case prior to any further orders being
issued by the state family law court (which is in New Mexico if that
has any bearing on anything), my understanding is that the automatic
stay would stop the family law court from awarding anything further.
My question is: What is likely to occur after this in the
bankruptcy court? Is it likely that the non-debtor spouse gets
relief from stay to proceed in the family law court with the
prepetition action? Or would they simply file a proof of claim for
the amount to which, if the debtor objected, would the bankruptcy
judge end up sending it to the family law court to decide?
Overall this is an issue of timing and I'm trying to decide/advise
my client whether filing before any further court orders come out of
the family law court holds any benefit for them, or whether it
simply doesn't matter because the end result is likely to be the same.
Also, just to be absolutely sure, under the current law, marital
equalization/property division payments are dischargeable in Ch. 13,
but not in Ch. 7, so if the debtor was unable to complete their Ch.
13 and converted to Ch. 7, that debt would not be discharged, right?
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Mark J. Markus
Law Office of Mark J. Markus
11684 Ventura Blvd. PMB #403
Studio City, CA 91604-2652
(818)509-1173 (818)509-1460 (fax)
web: http://www.bklaw.com/
This Firm is a Qualified Federal Debt Relief Agency (see what this means at http://bklaw.com/bankruptcy-blog/2008/0 ... efinition/)
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