Pennsylvanians who are planning to divorce should be aware that their divorce court orders regarding property division may be invalidated if their spouses subsequently file for bankruptcy in certain cases. A recent decision in Georgia illustrated the point that family courts do not have jurisdiction to make orders affecting the ability of bankruptcy courts to decide what debts are dischargeable.
The Georgia family court ordered a man to pay his ex-wife $53,000, and the court called it a type of property division payment. In its order, the divorce court also stated that the man would not be able to discharge that debt in any future bankruptcy case. Two weeks after the divorce orders were issued, the man filed for bankruptcy.
After his ex-wife filed a motion objecting to the discharge of the $53,000 payment, the bankruptcy court ruled against her. In its decision, it stated that the family law courts have no jurisdiction to determine what debts may and may not be discharged in bankruptcy cases. In addition to the $53,000, the man was also ordered to pay his ex-wife $1,300 a month in child support, which could not be discharged as a matter of public policy.
People might want to get the advice of family law attorneys about property division in their divorce cases. If a lump-sum payment is meant to be spousal support, their property settlements should specifically state so. Attorneys may negotiate the wording of property settlements so that they are clear. They may also be able to negotiate property settlements short of litigating the matters in court. Lawyers may advise their clients about different potential tax issues that might arise from agreeing to accept certain asset classes, and they may also work to help their clients protect themselves and their abilities to retire in the future.