You filed a Chapter 13 bankruptcy to save your home and your car, but now you and your spouse are separated and have filed for divorce. What happens to your case? (See also, What If My Spouse Dies During Our Bankruptcy?).
Every bankruptcy attorney who files Chapter 13 bankruptcies has this issue arise from time to time. When you approach your attorney about your divorce issues, you must remember that your attorney represents both of you, and cannot help you in any way that could be detrimental to your spouse.
You and your spouse need to consider making an agreement between yourselves on who pays what amounts, if any, and set it out in your divorce settlement. This way, once your divorce is finalized, you will have some way to enforce the terms that you agree upon if your ex-spouse fails to keep his or her part. You need to know that you will have to hire an attorney who is not your bankruptcy attorney to help you reach this agreement. If you cannot agree and the payments are not made in full, the Chapter 13 trustee will file a motion to dismiss your case. See What Happens If I Cannot Complete My Chapter 13 Plan (Part One).
If you simply cannot agree, but you wish to continue in your Chapter 13, and you only wish to pay for one of the vehicles, the house, or some other portion of the your debts, you will need to hire a different bankruptcy attorney to file a motion with the court to bifurcate (split) your case, and file a new plan for you only. Your spouse can also hire another attorney to file a new plan for him or her to pay for the items that he or she wants to keep, or your spouse could convert to a Chapter 7 bankruptcy. Your current attorney cannot represent either of you unless you both agree to waive the conflict that arises out of representing only one party.
SOURCE: Bankruptcy Law Network