Can My Ex Gain Custody of My Kids If I File Bankruptcy?

If you’re struggling financially, you might consider the possibility of filing bankruptcy. But what if you’ve got a pending divorce matter involving kids? Or perhaps you share custody of your child with an ex-spouse or partner? Could filing bankruptcy alter your custody arrangement? 

The short answer is no, your ex can’t obtain custody of your kids merely because you filed bankruptcy. But in theory, it could make a difference in a custody arrangement. To explain this further, let’s first take a look at the types of child custody in Alabama and how courts make child custody decisions.

Types of Child Custody in Alabama

Alabama is like many other states in that there are two sets of variables that determine child custody.

The first set deals with the type of custody, which can be either physical or legal. Physical custody refers to which parent has the primary legal right to live with the child. Legal custody deals with which parent has the legal right to make significant decisions about the child, like what church they’ll go to, which school they’ll attend and major medical decisions.

Joint and sole are the second set of variables. They help define how the physical and legal custody will be given to each parent. 

Using these two sets of variables, we can come up with the following five potential child custody arrangements:

  • Joint physical: Both parents have physical custody of the child. This usually means the child will spend significant time with each parent and they will both work together to come up with an agreement on where the child will live and for how long.
  • Joint legal: Both parents have an equal legal right to make important decisions about the child’s life.
  • Joint: This occurs when both parents have joint physical and joint legal custody of their child(ren).
  • Sole physical: When the child lives with just one parent and the other parent only has visitation rights.
  • Sole legal: The parent with sole legal custody is the only parent that can make important life decisions for the child.

How Courts Make Child Custody Decisions 

When it comes to deciding which parent gets custody and the type of custody they get, Alabama courts (and family courts in most states) will focus on one thing: what is in the best interests of the child? In answering that question, a judge will look at several factors, such as:

  • The child’s age and sex
  • The child’s preferences
  • The home environment
  • The child’s relationship with the parents
  • How well a parent can meet the child’s needs

There are other factors, but none of them are specific to bankruptcy. In other words, a judge will not consider a parent’s bankruptcy proceeding when deciding how to award child custody or whether to modify an existing child custody arrangement.

But earlier I mentioned that it’s possible bankruptcy could play a role in a child custody decision. That’s not because of the bankruptcy filing itself. Rather, it’s the fact that bankruptcy is a strong indicator that the borrower is not the most secure or stable in terms of financial health. 

How a Bankruptcy Could Make a Difference in a Child Custody Case

Looking back at the above factors courts consider when deciding child custody, you’ll notice that none of them directly mentioned how much money a parent has. But when you dig deeper, it’s easy to see how money can affect those factors.

For example, a court wants a parent with custody of a child to be able to adequately provide for the child’s reasonable needs. This refers to enough food to eat, a safe place to live, sufficient clothes to wear and so on. If a parent hires a bankruptcy attorney in Anniston then it might indicate that a parent will have trouble meeting those needs.

But hold on before you decide that filing bankruptcy means you’ll lose custody of your kids. It’s not that a parent is bankrupt, so to speak, that matters. It’s that a parent’s financial situation is not in the best interests of the child. 

Put another way, courts don’t care about bankruptcy. Instead, they care about a parent’s financial resources to raise the child in the best manner possible. Let’s look at two hypotheticals to help illustrate this.

In the first hypothetical, you have a parent that can’t keep a steady job. They are about to get evicted and currently have no arrangements set up to find a new place to live. They have some significant financial assets, like a nice car and some real estate that are both fully paid for.

In the second hypothetical, you have a parent that has a steady job and a home with a mortgage. But due to a cancer diagnosis from a few years ago, they’ve accumulated a massive amount of medical debt for the treatments they received. They filed Chapter 13 bankruptcy that created a five-year repayment plan that they should be able to afford with their current job and will allow them to keep the home.

The parent in the first hypothetical could be in a better financial position if you simply look at the net worth of each parent. But all else being equal, you don’t need to be a lawyer or a judge to know which parent is more likely to get custody of the child (hint: it’s the parent from the second hypothetical).

The Bottom Line

Judges deciding child custody matters don’t really care if a parent has filed or will file bankruptcy. What they care about is if a parent is responsible and has the financial ability to care for the child they have custody of. Going into bankruptcy may indicate that a parent lacks this financial ability, but before making a child custody decision, the judge will take a closer look to see what’s going on.