You be the Judge: The filing of a Bankruptcy Petition stays

If you are contemplating a divorce, this may interest you.

New Jersey Courts have jurisdiction to order an equitable division of marital property in divorce proceedings. The State Legislature has determined that promotes an advantage to society, by treating the spouses as equitable partners in most property obtained during the marriage.

But the United States Congress has determined that there is another social advantage in protecting the continuation of litigation when a bankruptcy petition is filed.

The Appellate Division recently dealt with a case where the two policies came in conflict.

Plaintiff filed for divorce; defendant also counterclaimed to terminate the marriage. The trial court entered several orders requiring defendant to provide discovery. Defendant filed a petition for bankruptcy. After that, because defendant failed to comply with the matrimonial discovery orders, the trial court imposed sanctions, suppressing defendant's answer and permitting plaintiff to proceed by default.

The default judgment dissolved the marriage, divided the marital assets, provided for custody and support and awarded plaintiff counsel fees of $120,000.

YOU BE THE JUDGE: Was the trial court in granting equitable division of marital assets while a bankruptcy was pending?

The Appellate Division reversed the default judgment. The filing of the bankruptcy petition automatically stayed the "commencement or continuation" of judicial proceedings against defendant. Plaintiff's application for sanctions violated that stay.

The decision points out that a courtroom can bring justice and may be the only way to protect your rights. Our Firm knows courtrooms; we have harnessed the power of the law in courtrooms to bring justice for our clients for decades in Closter, Cresskill, Demarest, Fair Lawn, East Rutherford and throughout Bergen County, in North Haledon, Prospect Park, Passaic, Little Falls and elsewhere in Passaic County, in Nutley, West Caldwell, Roseland, Maplewood, Orange and throughout Essex County, in Whippany, Montville, Rockaway, Riverdale, East Hanover and Dover in Morris County, in New Brunswick and Fords in Middlesex County, in Murray Hill, Kenilworth, Plainfield and Roselle in Union County, in Freehold, Colts Neck, Marlboro and Oakhurst in Monmouth County, in Edison and Cranbury in Middlesex County, in Kearny, Bayonne, Secaucus and North Bergen in Hudson County, in Ewing, Hamilton Township, Frenchtown and Pennington in Mercer County and throughout the State of New Jersey, as well as New York City. Please contact us to discuss how we can help you in a new lawsuit or provide a "second opinion" about your pending lawsuit. There is no obligation for the initial consultation.