Virginia Equitable Distribution: Apportioning Debt Discharged in Bankruptcy

Let’s assume that we have a married couple.  They jointly own a home and are jointly liable on all debts encumbering it, including the mortgage and home equity line of credit.  They are individually and jointly liable on various other debts, including some notable credit card debt.  The parties then separate in anticipation of their inevitable divorce.  Wife files for divorce.  Husband files for bankruptcy.  Wife does not file for bankruptcy.  Wife’s equitable distribution case is stayed by the trial court until after Husband has his debts discharged pursuant to his bankruptcy filing, including his obligations to the lender of the mortgage and home equity lines of credit encumbering the marital residence.  Wife therefore becomes solely liable to the lender for the mortgage and home equity lines of credit.  Wife, at their divorce trial, argues that the mortgage and home equity lines of credit are marital debts that the court must apportion between her and Husband.  Husband argues that he can’t be held liable on these debts to Wife because his liability was discharged pursuant to his bankruptcy filing and he is entitled to the fresh start that federal bankruptcy law intends to provide debtors like him.  So must the trial court apportion the mortgage and home equity line of credit debt between these parties per Va. Code § 20-107.3(E) or does federal bankruptcy law’s fresh start preempt the state trial court’s legislative mandate? Continue reading

Virginia Equitable Distribution: Millionaires, Marital Waste and Spousal Support

Can one spouse pay temporary spousal support by making withdrawals from marital accounts?  Can one spouse pay for his attorney’s fees by making withdrawals from marital accounts?  Can one spouse pay for his mortgage payments and household expenses from marital funds while the divorce case is pending?  Wouldn’t it be unfair for the payor spouse to continue to deposit his work income into his own separate account for his sole benefit moving forward while paying for his various obligations by withdrawing funds from marital accounts that otherwise would be available to the payee spouse at the divorce trial? Continue reading