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What Happens to Me if my Ex-Spouse Files Bankruptcy?

  • May 30 2016

If you have gotten a divorce and you learn that your ex-spouse is filing for bankruptcy, you are probably worried how it will impact you. Even though your divorce decree sets forth that your ex is obligated to pay certain marital debts, you have reason to be concerned.

First of all, as soon as your ex-spouse files a Chapter 7 or Chapter 13 case, the automatic stay immediately goes into effect. The stay prohibits creditors from taking any collection efforts against your ex-spouse. This means that the creditors will start exploring their other options for collecting what is owed to them. Your ex will likely be able to discharge most of his or her debt, including the debt that is his or her obligation under the divorce decree. Thus, if your name is still on the credit agreements or loan contracts with the creditors, they will be looking to you for payment. Even though your divorce decree requires your ex-spouse to pay the debt, your lenders are not bound by the decree unless you obtained a release. You should also understand that whether you live in a community property state is also a factor that should be considered in determining how your ex’s filing may affect you.

It is important to understand that your divorce decree is a contract between you and your ex. This means that your creditors are not a party to the agreement and they are not bound by it, unless the creditor specifically agreed to modify the loan or release you from the obligation. As a result, whatever was jointly owned by you as a married couple before the divorce may still be owned by both of you.

If you learn that your ex-spouse is going to file a personal bankruptcy case and you have joint debt, you should confer with your own debt relief attorney. You may want to consider filing your own Chapter 7 or Chapter 13 bankruptcy case.

If you are considering filing a bankruptcy and you need help determining which type of filing would be best for you, contact Fitzgerald Campbell to schedule an appointment. We do not offer just one debt relief option, we don’t push you in one direction. If bankruptcy right for you, we will tell you. If it’s not, we will tell you that. If bankruptcy is your get out of debt plan, it needs to be done right. It needs to be in the hands of experienced lawyers who have been there before. Contact us today!

Posted in: Bankruptcy