Minnesota Divorce and Bankruptcy: Often people who are contemplating a divorce are also contemplating bankruptcy. Marriage relationships can deteriorate quickly when there is significantfinancial pressure. In this circumstance, bankruptcy can be a reasonable option.
If you are considering bankruptcy at the same time you are considering divorce, you need to consult with both a bankruptcy attorney and a divorce attorney. And, your spouse and you should not use the same bankruptcy attorney, nor should you use the same divorce attorney. Your interests are not the same.
In Minnesota, it is a violation of the rules of ethics governing attorneys for an attorney to represent both parties to a divorce when children are involved. While it is technically not a violation for an attorney to represent both parties to a divorce when no children are involved, this is not a good idea for the parties or for the attorney, and I strongly recommend against it.
One notion that can confuse couples going through bankrutpcy is that the definition of the marital estate that is provided by Minnesota divorce law does not exist if a divorce is not pending. Here’s an example: in Minnesota, a spouse has an interest in real property owned by his or her wife or husband, even if the spouse is not shown on title as an owner. However–this “marital interest” comes into place only when a divorce proceeding has been started (or possibly when the property is sold). In a Minnesota divorce proceeding, who’s name happens to appear on title to property does not mean very much. In a bankruptcy proceeding, the name on title can be very significant.
Also, in Minnesota divorces the court will allocate responsibility for payment of debt to one spouse or the other. If a bankruptcy is looming, the spouses may want to consider an agreement that either or both of them can discharge the debt in bankruptcy. Without that agreement, a former spouse can make it difficult for a party to discharge certain debt in a Chapter 7 bankruptcy proceeding.
Another issue that comes up: often one spouse will obtain credit in the name of the other spouse, without that spouse’s knowledge or consent. In a case like this, the attorney for the spouse who may be facing unknown debts should conduct some formal discovery to comple the other spouse to disclose all debt obligations that he or she may have incurred in the name of the client.
For more information about Minnesota divorce, feel free to contact me at (952) 270-7700.