December 28, 2011

Did you know that when a bankruptcy case is filed by or against a spouse while a divorce is pending, exclusive jurisdiction over the property of the debtor spouse (the bankruptcy estate) is automatically transferred to the bankruptcy court. See In re White, 851 F2d 170, 173 (6th Cir 1988).

Posted here by Flint Bankruptcy Attorney Terry Bankert 235-1970. See Http://www.attorneybankert.com

In the law of Bankruptcy all your possessions and debt become what is called an estate. The bankruptcy estate is created when the bankruptcy case is filed (whether filed voluntarily by the debtor or filed involuntarily against the debtor by creditors meeting the requirements of 11 USC 303). The bankruptcy estate consists of all property of the debtor. 11 USC 541 defines property of the estate very broadly; generally, it includes all property of the debtor “wherever located and by whomever held.” See 11 USC 541 discussed in §§17.5–17.6.

Family distress comes in many forms, financial and emotional.When a bankruptcy is filed by (or against) a spouse while a divorce case is pending in state court, the state court’s ability to take action against property of the debtor’s estate is automatically stayed or limited by 11 USC 362. There are some exceptions to the automatic stay pertaining to family law matters, which are found in 11 USC 362(b)(2).

see Michigan Family Law ch 17 (Hon. Marilyn J. Kelly et al eds, ICLE 7th ed 2011), at
(last updated 12/16/2011).