Recently, Erin J. Kennedy successfully argued the ground-breaking case of In re Ruitenberg before the US Court of Appeals for the Third Circuit involving bankruptcy, divorce and equitable distribution.
The court held that a debtor’s spouse has an unsecured claim for equitable distribution as long as a complaint for divorce is pending when the bankruptcy case is filed.
Prior to the Third Circuit decision, the prevailing law in New Jersey was that a claim for equitable distribution was not a claim until a judgement of divorce was entered, a subject of many published opinions by the NJ Bankruptcy Courts.
One unanswered question is whether an interest in assets held by a trustee in a bankruptcy case should be included in marital assets subject to equitable distribution. -Erin J. Kennedy, attorney
In this New Jersey Law Journal article Ms. Kennedy explores the revised treatment of equitable distribution claims in the wake of the Ruitenberg case and the unchartered territory that lies ahead, namely whether a nondebtor spouse has an equitable interest in the marital assets that can be enforced directly against the asset regardless of the legal title holder.