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Could bankruptcy cost you custody?

Michigan's law sets out 12 factors to be considered whenever there is a custody dispute, the "sum total" of which are used to determine custody. While "bankruptcy" isn't specifically listed among them, there are several factors that could allow the judge to consider your past or present bankruptcy as part of the custody decision.

One factor is your capacity to provide your child with "food, clothing, medical care" and any other material needs. A bankruptcy, particularly a current one, could indicate financial instability that might make it difficult for you to provide those basics for your child.

Another factor is your "moral fitness." While bankruptcy isn't generally considered a moral failing these days, there are some judges who may see it that way, especially if your bankruptcy is the result of overspending instead of something unavoidable, like a job loss or medical bills.

Finally, the last item judges can use serves as a "catch-all," because it essentially says that the court can consider any factor it finds relevant to a particular custody dispute.

None of that means that the judge is definitely going to look into your bankruptcy and consider it when making a decision—unless your child's other parent brings the issue before the court. Since you can generally count on someone who wants to keep you from getting custody of a child to use whatever ammunition he or she can find against you, you may want to be ready to defend your financial situation or history in family court.

If your bankruptcy is nearly a decade old and you haven't had any major financial problems since, it shouldn't have much bearing on your case. If it's more recent, focus on explaining to the judge either why the situation was beyond your control and unlikely to repeat itself or how you have changed any risky financial behavior for the better.

If you are currently going through a bankruptcy, which can happen when you've just gone through divorce, focus on explaining how you see the bankruptcy as a proactive step that will allow you to deal with your debt head-on and make it possible for you to provide your children with what they need.

In any hard-fought custody dispute, expect your opposition to use whatever they think might help their case. By thinking ahead, you can have a ready response that will satisfy the judge and keep your bankruptcy a non-issue.

Source: Credit Slipts, "Bankruptcy as a Disqualifying Factor for Child Custody?," Bob Lawless, accessed Feb. 20, 2017

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