A divorce can determine by law that your ex is responsible for half of any shared credit debt. Did you know if your ex files bankruptcy, any shared debt falls solely on you to be paid? Credit companies care about one thing, and that one thing is getting their money. Debt collectors don’t care if your ex-spouse is intentionally trying to get out of his or her obligations. How can you protect yourself then if your ex files for bankruptcy?
What Are the Issues of Bankruptcy in Regards to Divorce?
At Sherer Law Offices, we’ve seen three main concerns regarding bankruptcy and divorce:
- The payment of support after a filed bankruptcy
- The enforceability of a property settlement agreement after a filed bankruptcy
- The payment of joint credit card debt if only one spouse files for bankruptcy
What Happens Regarding Support?
Support is one thing you don’t have to worry about. The Bankruptcy Code considers any support from an ex-spouse “non-dischargeable.” Family support, alimony, and child support debts are payments that cannot be eliminated. The support payments of divorce have a superior priority under the Bankruptcy Code.
What Happens Regarding Property Settlement Agreements?
Bankruptcy enforces what is known as an “automatic stay.” The automatic stay puts a stop to all foreclosures, garnishments, bank levies, and continuous calls from creditors trying to collect debt. While the automatic stop is pleasant for the one filing bankruptcy, it has no application to the spouse who doesn’t file. You will be solely responsible for anything being paid upon jointly.
Bankruptcy on the part of your ex most often will not affect property that is solely yours. There is the issue of property owned with your spouse and a third party. The trustee may take only your ex’s interest in the property or all of the property depending on the type of ownership your ex has upon filing bankruptcy. The trustee in this case cannot take your share. In the event that the property was divided between you and the trustee, bankruptcy on the side of your ex may require that the entire property be sold.
What Happens Regarding Joint Credit Debt?
The automatic stay pushes all joint credit debt upon you to be paid unless you also file for bankruptcy along with your ex. Upon obtaining the credit debt, both you and your ex signed a contract holding you both responsible for repayment. Only death or bankruptcy can void the contract. The credit company will not be concerned with “fair,” even if the debt was accrued by your ex.
What Can I Do to Protect Myself?
Speak with your divorce attorney during the divorce about clauses. You can insert clauses into property settlement agreements and the divorce judgment to guard against how bankruptcy affects property and credit debt. You will then have the right to reopen the divorce case for revision if bankruptcy occurs by your ex-spouse.
What If I’m Already Divorced?
Each divorce case is different. Get into contact immediately with a bankruptcy attorney and a family attorney from Sherer Law Offices to see what can be done and how to safeguard your family from impending debt. The counsel of an attorney can evaluate and explain what is happening to you in detail in regards to your specific case. There’s no time to wait when large amounts of debt have fallen onto your shoulders.
If you have suffered from an ex filing for bankruptcy or want to safe-guard against it, contact Sherer Law Offices for expert assistance.