There have been many occasions when I have dealt with couples filing a joint bankruptcy petition in the midst of a divorce. The question I sometimes get is, do we need to get separate lawyers, or can you represent both of us through the process?

I have written about this before, but the subject came up in an episode of my podcast, Bankruptcy Strategies in Divorce, and I wanted to clarify a few things. Divorcing couples, by their very nature, are adverse to one another; they have different goals and legal positions. These need to be considered before a lawyer can take on representation.

When Is There a Conflict?

When an attorney takes on a case he needs to represent the best interests of the clients. But what if what is good for one is bad for the other? This creates a conflict of interest. However, an attorney can represent both spouses in a bankruptcy if:

  • Any potential conflict is identified and disclosed to the couple
  • The couple gives written consent to the joint representation; and
  • The attorney "reasonably believes that [he/she] will be able to provide competent and diligent representation" to both spouses

When I meet initially with potential clients, I do a thorough review of their situation and determine a) whether there are any conflicts; and b) whether or not they are insurmountable. Naturally, if I am uncomfortable with "b," I suggest separate counsel for both (of which I am neither).

When Do Conflicts Come Up?

Just to illustrate, there are four different scenarios.

Joint Chapter 7 Prior to Final Divorce. This is the most common situation, as the couple is attempting to shed significant joint debt to make their divorce simpler and more straightforward. I sometimes see problems, but the clients are most often on the same page with the same goals, so I do not usually see conflicts.

Joint Chapter 13 Prior to Final Divorce. This situation, unfortunately, is a disaster waiting to happen. Repayment plans can last 3 to 5 years, and the couples usually complete the divorce prior to discharge, and the likelihood of adverse interests arising in the course of the plan is high. I will not handle those.

Bankruptcy After Divorce is Final (7 or 13). These cases cannot be, by definition, joint. Only married couples can file joint bankruptcies, so each former spouse would be filing his or her own bankruptcy, so there is no cost saving in having the same case and the same attorney. They usually go to separate attorneys anyway. For that reason, the situation rarely presents itself.

So What Do We Do?

Any joint chapter 7 bankruptcy filed before the divorce should be done with full communication among the parties, their divorce lawyers, and their bankruptcy lawyer. That way the chances of problems are minimized, and the bankruptcy becomes a joint strategy for the benefit of both spouses.

If you live in South Jersey and are considering filing bankruptcy, call my office at 856-432-4113 or contact me through this site for a free consultation to discuss your case. If you are looking for more information about bankruptcy, then download my free book,Top Questions People Ask About Filing Bankruptcy in New Jersey.

Steven J. Richardson
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Bankruptcy, Collections, Student Loan, DUI and Traffic Court attorney in Woodbury, NJ.
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