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June 2, 2007

Effect of the Automatic Stay on Domestic Relations Matters

Filed under: Automatic Stay — admin @ 8:53 am

Bankruptcy triggers an automatic stay, which, among other things, prohibits the commencement or continuation of judicial proceedings that were or could have been commenced prior to the filing.  As discussed below, various exceptions to the stay allow many actions and proceedings to continue or be initiated after a bankruptcy case is filed.  In addition, bankruptcy courts have the authority to lift the stay to allow certain actions and proceedings to continue.  Confirmation of a chapter 11, 12 or 13 plan may have the same effect as the automatic stay, since confirmation binds all creditors dealt with in the plan.
The 2005 amendments to the Bankruptcy Code added new exceptions to the stay for child custody, visitation, divorce and domestic violence matters.  Many of these were common-sense changes for actions and proceedings that were technically subject to the stay, but which many people assumed were not stayed.  For example, an action dissolving the marriage bond was technically stayed under the old law, and relief from the stay was required.  The amendments will now allow entry of such decrees without a lift-stay order.  This will have the beneficial effect of fewer void divorces and technically bigamous marriages.  Marital property divisions are still subject to the stay.
Another important amendment allows withholding from wages or other income that is property of the estate and from property of the debtor for a domestic support obligation.
In addition, whether based on an explicit statutory exception or the inherent power of state courts, it is often asserted that the automatic stay will not prevent state courts from entering and enforcing orders relating to the protection of persons or the health of the parties.

See Also: Chapter 7 Bankruptcy

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