COVID IMPACT ON FAMILIES –By Nedda Ghandi, Esq. Practitioners in family law are probably noticing an increase in phone
calls. The number of couples planning to divorce has grown significantly since the outbreak of COVID-19. The COVID-19 pandemic and the associated impact of policies and orders associated therewith have been an emotional rollercoaster for many Americans. People have been forced to spend more time together than ever before. In many cases, people have decided they simply do not like each other as much as they once did, or as much as they thought they did. The pandemic is routinely turning nuptial fault lines into fissures because the enforced proximity of 24/7 lockdowns and continued social isolation which can remove outlets for lowering relationship pressure, such as sport, going to work, or having a drink with friends. For those whose marriages had been on shaky ground beforehand, being quarantined together for months likely brought them closer to a decision– one way or the other. For some, the forced isolation may have caused them to stop and examine their priorities and work through their issues. For others, the physical confinement and fear of an uncertain future may have amplified their feelings of imprisonment in their failing marriage and confirmed their desire to get a divorce. The stress of COVID is causing couples to seriously consider splitting - but the associated economic pressures mean they may be forced to cohabit. Lost jobs, financial distress, falling property values and social distancing make it more difficult to find alternative accommodations, which means many estranged couples are forced to continue living under the same roof. This may result in increased tension during divorce proceedings as spouses’ “dirty secrets” are more likely to be exposed and any disputes in the proceedings will be brought more significantly into the home. However, the most significant consideration that practitioners will likely need to navigate is the handling of a divorce in times of significant financial strain. Many practitioners may consider that the answer to the financial strain experienced by their client is a personal bankruptcy. However, when
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mixing community property laws with the bankruptcy code, the nonfiling spouse can find himself or herself in great jeopardy by design or accident. This is especially true when one spouse files bankruptcy during a pending divorce proceeding and prior to any family court determinations regarding the division of the separate and community property rights of the couple. Many family law practitioners do not realize that the non-filing spouse will lose all exemption rights upon the filing of a bankruptcy by the filing spouse. Given that in many divorces, the parties will need to continue interactions even after divorce, either in raising children or in managing post-divorce property divisions, it may be best that bankruptcy either be filed jointly before the division of assets in order to preserve as many of the community assets as possible. If the parties cannot file together prior to an asset division, then the parties and the assets will be more protected if they wait until after the property is divided by the family court. In a Chapter 7, the debtor’s property, with some exceptions, becomes the bankruptcy estate. Section 541(a)(1) of the Bankruptcy Code provides that property of the estate includes all legal or equitable interests of the debtor in property as of the commencement of the case. Under section 541(a)(2), the estate includes “[a]ll interests of the debtor and the debtor’s spouse in community property as of the commencement of the case that is ... under the sole, equal or joint management and control of the debtor.” (Emphasis added). Section 541(a)(2) applies regardless of whether one or both of the spouses file. However, only the filing spouse will get to assert exemptions as to the property. This is one of the most damaging aspects of when divorce intersects with bankruptcy proceedings. Unless there is a nuptial agreement or other means of maintaining property separately, in Nevada, all property acquired during marriage is likely community property and property of the bankruptcy estate. If the community asset contains equity that the filing spouse does not claim exempt, a Chapter 7 trustee may attempt to liquidate assets that are community in character and there will be little the couple can do about it.
