In an Illinois personal bankruptcy proceeding a debtor may be granted a discharge of his or her debt. When a bankruptcy petition is filed, a bankruptcy estate is created which is made up of all the debtors’ property, which will be sold by the trustee to satisfy various creditors in exchange for the discharge of debt.
If you and your spouse are divorcing and he or she is considering bankruptcy, it is important to understand that the marital property subject to equitable division in a divorce may be included in the bankruptcy estate and may be used to satisfy the spouse’s debt unless the spouse not filing bankruptcy acts.
The marital property of the spouse not declaring bankruptcy should not be part of the bankruptcy estate. A divorcing spouse of a bankruptcy petitioner may be able to preserve their marital assets form the bankruptcy estate. It is important to work with an experienced divorce attorney to ensure you are protected financially.
Any attempt to liquidate marital assets in a bankruptcy must be countered, which may include creating a trust to force the bankrupt spouse to preserve the non-bankrupting spouse’s share of marital assets they are entitled to in a divorce. If you and your spouse are further along in the divorce process, it may be that an effective trust exists already via a marital settlement agreement to cover assets yet to be distributed such as a pension.
Whatever the case may be, it is important to work with an experienced divorce attorney to ensure that you are financially protected in the event a spouse’s bankruptcy is a factor in your divorce. For more information, contact Libertyville divorce lawyer Ronald L Bell & Associates P.C. for immediate assistance today.