Divorce Attorney Fees: Can They be Discharged in Bankruptcy?

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When some couples decide to split up, each party typically retains separate lawyers so that both spouse’s interests are protected. Sometimes, one party agrees to pay for both attorneys’ fees, typically because of a significant discrepancy in the spouses’ incomes. For example, a husband who makes $70,000/year may offer to pay for his own attorney and for the attorney of his spouse (who only makes $40,000/year).

Offering to pay for your (soon to be ex) spouse’s divorce attorney is a kind gesture that will undoubtedly be greatly appreciated by your spouse. Although you are moving toward a divorce, things can either end amicably or fraught with tension and anger. Choosing the latter is highly advisable.

Once your divorce has been finalized and you receive the official “Final Judgment of Divorce” from your family court, you will be expected to begin handling your end of the financial agreement. This agreement is commonly referred to as the PSA, or the Property Settlement Agreement.

Moving from a household with two incomes to a one income household can take awhile to get used to. What you thought you’d be able to afford may end up being beyond your means now that you’re on your own. This is especially true if you are now paying child support and/or alimony.

You’re now discovering what it’s like to pay all of the monthly expenses with no help from your ex-spouse. Add in the aforementioned support payments and attorney’s fees, and it’s quite possible that you are simply tapped out. Having been a great money manager in the past, suddenly being unable to stay on top of the monthly bills can be depressing.

Filing for bankruptcy after divorce is becoming more and more common. A divorce is often the cause of new and significant financial problems that didn’t exist during the marriage.

After your divorce is finalized and you’ve had a few months on your own financially, you may come to the conclusion that filing for bankruptcy is the best way for you to get out from under any unsecured debts you have. The simple act of getting divorced may have been the straw that broke the camel’s back, so to speak.

If you file for bankruptcy after divorce in New Jersey, your two best options are chapter 7 and chapter 13. Filing for chapter 7 bankruptcy will allow you to discharge all (or at least most) of your unsecured debts (credit card debt, medical debt, past due utility bills), while chapter 13 will allow you to reorganize your unsecured debts into a more reasonable and attainable schedule.

You may be wondering if it’s also possible to discharge your divorce lawyer’s fees in a chapter 7 bankruptcy. Attorneys’ fees are the same type of debt as medical or credit card debt. Your unpaid divorce attorney’s fees, along with any fees owed to your spouse’s attorney, are unsecured debts and can be discharged in a chapter 7 bankruptcy.

UNLESS…

(There’s always a disclaimer, isn’t there?)

If the payment of your ex-spouse’s divorce attorney’s fees is included as part of your spousal support agreement, then it will be considered non-dischargeable. Any child or spousal support that has been ordered via the court cannot be discharged through a chapter 7 bankruptcy. Your own divorce attorney’s fees, however, may be dischargeable.

 

Image credit: Desi
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