Legal Question in Bankruptcy in Missouri

This question involves my parents. They filed bankruptcy 6 years ago and cleared all there debt, minus their tax debt. They currently have 50k federal and 20k state tax from my dads failed business. My dad wants to wait until the 7 years passes (1 more year) to refile to clear the tax debt. The issue is, they NEED to get divorced. He said a divorce was in the works after we found out he was cheating. My mom works out of state right now on a traveling job due to not being able to find a job locally. She fully supports the household, mortgage, utilities, and repairs. While he lives there and does nothing. The whole family is tired of it and she's come around to accepting the divorce but is worried about getting stuck with the taxes.

What's her best option? If they get divorced will they/she still be able to clear the tax debt via a bankruptcy still? The home is in a trust to the kids and can't be touched (by him or the IRS). They don't have any real assets. She works so hard, and just needs to be free of this freeloader. We honestly just want to sell the home and buy a condo for our mom.

Any answers would be extremely helpful.

Thanks in advance!

They live in St. Louis, MO


Asked on 2/27/13, 3:58 pm

1 Answer from Attorneys
Alicia Beeler Villines Alicia Beeler Villines (sole practitioner)

To be dischargeable, a tax debt must follow the "3-2-240" rule. The debt itself must be at least 3 years old (after April 15, 2013, 2010 tax debts will be dischargeable), the returns must have been on file for at least 2 years, and the debt must have been assessed at least 240 days ago. Also, no fraud, etc., on the part of the taxpayer.

The time between filing one chapter 7 and the next used to be 6 years, but was increased to 8 by the 2005 Bankruptcy Abuse Prevention & Consumer Protection Act. It was never and is not now 7 years. Also, 8 years is a full eight years from the date of the filing, not 7 years, 11 months, and 27 days or so.

Not sure what "in the works" means. It doesn't sound like she's been served with any papers, but just to be sure that he's not pulling a fast one re service, I think I'd check CaseNet using his name every week or so just to be sure.

At this point, I would seriously consider going ahead with the divorce, but be extremely careful how about his this is addressed in the final decree. It's been a while since I did a divorce, but the last time I checked on the issue, the divorce court was required to divide the property, but debt division was discretionary. A creditor is not and has never been bound by a divorce court's debt assignment. (For example, if Husband & Wife have a joint Visa, and H is ordered to pay the bill, Visa can still collect from W. The divorce order gives W the right to sue H to recover the $$ that Visa collected from her.) Sadly, many domestic law attorneys continue to be unaware that BAPCPA has severely eroded the ability for either party to fully discharge debt that is assigned during a divorce. Options to consider might be making sure the debt is assigned to Dad or simply not formally assigning the debt. And although I haven't seen this anyway, I'd also consider a paragraph along the lines of "neither party's right to seek relief under the Bankruptcy Code of the United States of America for any debt arising during the course of the marriage shall be affected.".

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Answered on 2/28/13, 11:00 am


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