The New Hampshire Supreme Court ruled a divorce court does not have the powers of a bankruptcy court in the case of Katherine F. Beal and R. Keith Beal on April 11, 2006. In the Beal case, the divorce court was asked, as is frequently done, to divide up the parties’ assets and debts. The couple had assets of approximately $72,000.00 and debts of approximately $90,000.00.
Instead of dividing the assets and debts, the divorce court ordered property to be sold and appointed a commissioner to use the profits realized from the sale of the property to either pay off the couple’s debt or negotiate with creditors for a lower payment. After the commissioner negotiated a payment plan with creditors or paid off the couple’s debt, any remaining assets would be divided between the parties.
The Supreme Court held that the divorce statutes only allows for property and debts to be divided between the parties. The statute does not allow the divorce court to function like a bankruptcy court, wherein a trustee is appointed to liquidate assets of the bankrupt debtor and use those liquidated assets to pay off the couple’s creditors.
Andrew J. Piela is a Director at Hamblett & Kerrigan, P.A. Mr. Piela concentrates his practice in civil litigation, family law, probate and land use litigation. You can reach Attorney Piela by e-mail at [email protected].