Leading Legal Firm, Busby & Lee, Helps Clients Understand Divorce Decrees Under New Bankruptcy Law

Among Houston's most renowned debt consolidation, consumer bankruptcy and family law legal firms, Busby & Lee helps inform clients of ever changing laws and the most effective modes operandi within them, in order to make sure the best possible result. The company's educational approach is turning out to be successful for its firm and its clients.

Most recently the company reported that a new bankruptcy law makes non-support obligations from a divorce or separation non-dischargeable in a chapter 7 bankruptcy. 11 U.S.C. 523(a)(15). A debt that is non-dischargeable means that an ex-spouse retains responsibility for repayment.

Attorney Michael G. Busby Jr. says that the discharge in a chapter 13 case is to some extent broader than that of a chapter 7. Debts dischargeable in a chapter 13 but not in chapter 7 include debts arising from property settlements in divorce or separation proceedings. While in a chapter 13 the debtor spouse would pay on the settlement, generally the payout would be less than dollar for dollar. In fact, in the majority of cases it would be pennies on the dollar.

"Understanding these differences is very important for our clients. The way in which the divorce decree is written can reduce the chance that the bankruptcy court will discharge the debt," said Busby. "You can reduce the likelihood that the debt will not be discharged by labeling the debt payments as either 'support' or 'alimony' in the decree. This usually applies in both chapter 13 and chapter 7," he added.

The Busby & Lee legal team underscored the necessity of having an attorney, who practices in both bankruptcy and divorce court, draft the final divorce decree in order to ensure that property interests are protected.