The Short Answer
Divorcing during an active Chapter 13 bankruptcy complicates both cases, but it doesn't have to derail your financial fresh start. When a joint case is split due to divorce, each spouse must obtain separate legal representation — we can no longer represent both of you once a conflict of interest exists. Depending on your individual income after the divorce, you may qualify to convert your case to a Chapter 7 or continue in a Chapter 13 on your own. The key variables are whether you pass the Means Test individually and whether your case can be bifurcated into two separate filings.
When you enter into the union of marriage, you are not normally thinking that it will not last. Like most, you begin a life together and when creating a life together you may accrue a lot debt. Unfortunately, relationships change and often times the only solution is divorce. Just as the divorce affects your jointly owned property, it also affects many other things in your life. And if you and your spouse find yourselves getting divorced during an active bankruptcy, you should be aware of the impact the divorce will have on your bankruptcy.
When you file bankruptcy as a joint couple, all of your information is shared with one another. When you divorce, unfortunately sometimes circumstances get ugly. There are many times that the relationship has ended, not so peacefully let’s say, and one party wants absolutely no contact with the other party. In fact, they want to just “disappear” from their spouse and want their spouse to have no idea as to their whereabouts.
As your bankruptcy attorney we are privileged to a great deal of personal information, which we must honor. How can we withhold your information from the person whom you filed with and we represent as well? We wouldn’t, which is why we would need to file a Motion to Withdraw. We are privy to personal information, and representing the both of you while in a bankruptcy would be a conflict of interest. The separated couple must then seek separate attorneys who will advise you going forward.
If you and your spouse are in a Chapter 13 bankruptcy due to income (meaning that together, you do not pass the Means Test), there may be an option for your case to be bifurcated or split. In other words, if you pass the Means Test on your own, you may be able to convert to a Chapter 7 individually as a result of the divorce. Even if you both remain in a Chapter 13 or if you both convert to a Chapter 7 bankruptcy, you may do so individually by having your case split into two individual cases.
Key Takeaways
- A single bankruptcy attorney cannot continue representing both spouses once divorce proceedings begin — a conflict of interest requires each party to retain separate counsel.
- If your joint case was filed because you needed combined income to pass the Means Test, a divorce may change your eligibility and allow you to convert to a Chapter 7 individually.
- Your joint Chapter 13 case can be bifurcated — legally split into two separate individual cases — so each spouse can proceed on their own terms.
- Even if you both remain in Chapter 13 after the split, your plan payments and repayment terms may need to be recalculated based on your individual income and expenses.
- Personal information shared during a joint bankruptcy filing cannot be withheld from your co-filer, which is one reason separating legal representation promptly matters.
- Divorcing while in an active bankruptcy does not automatically dismiss your case — with the right legal guidance, your path to debt relief can continue.
Attorney Insight
The moment a divorcing couple starts keeping secrets from each other — new addresses, hidden accounts, separate finances — our ability to represent both of them ethically is already over. What catches people off guard is that we have to file a Motion to Withdraw immediately once that conflict exists, which can leave both parties scrambling for new attorneys mid-case at an already chaotic time. The smarter move is to tell us early that a divorce is coming so we can help structure the transition — including evaluating whether one or both spouses now pass the Means Test individually — before the case gets derailed. In my experience, couples who wait too long to disclose the divorce end up with plan confirmation delays that cost them far more in the long run.
