A sad truth that any bankruptcy lawyer can tell you is that filing for bankruptcy and filing for divorce go together like peanut butter and jelly. As an Orlando bankruptcy lawyer, I have represented clients with money problems for many years and can tell you that many people file bankruptcy as a result of a divorce.
The issue of divorce and bankruptcy is so common with my clients, and the two are linked so well, I will be publishing more articles on the matter. However, this article will be devoted to the effect of filing bankruptcy and filing for divorce has on an individual spouse and any credit card debts they may owe.
What you need to keep in mind while addressing divorce and creditors, is that your spouse's credit card companies, and your own are third parties to your divorce proceedings. In other words, you and your spouse are the only ones party to your divorce and therefore the only ones bound by the marital settlement agreement.
It is normal for couples who are separating to specify which of them will be obligated to pay for each of the marital debts once the divorce is complete. To bind them to these terms, the spouses sign a marital settlement agreement. While the ex-spouses are bound by the terms of the agreement, the creditors in question depend solely on their credit card agreement, car loan, mortgage, etc. that each spouse signed when credit was given. To be honest, your creditors do not care how you distribute your debt obligations between you when you split up, they just want to be paid, and they are supported by law.
Bottom lineIf you each were obligated to the creditor before the divorce, no matter how you decide to divide responsibility for the debt amongst yourselves, you are each still liable to the creditor after you part ways.
Should one the the ex-spouses discharge their debts by filing bankruptcy, the other spouse, who has not filed for bankruptcy will continue to be legally bound by the credit agreements and therefore liable for the debts, no matter what the marital settlement agreement said. To get rid of their debt liability, the non-filing spouse must either try to work something out with the creditors, or filing bankruptcy themselves is also an option.
Bankruptcy and Divorce invite many complex legal issues. Over next weeks and months I will be discussing the common issues faced in Bankruptcy and Divorce in my blog.
The issue of divorce and bankruptcy is so common with my clients, and the two are linked so well, I will be publishing more articles on the matter. However, this article will be devoted to the effect of filing bankruptcy and filing for divorce has on an individual spouse and any credit card debts they may owe.
What you need to keep in mind while addressing divorce and creditors, is that your spouse's credit card companies, and your own are third parties to your divorce proceedings. In other words, you and your spouse are the only ones party to your divorce and therefore the only ones bound by the marital settlement agreement.
It is normal for couples who are separating to specify which of them will be obligated to pay for each of the marital debts once the divorce is complete. To bind them to these terms, the spouses sign a marital settlement agreement. While the ex-spouses are bound by the terms of the agreement, the creditors in question depend solely on their credit card agreement, car loan, mortgage, etc. that each spouse signed when credit was given. To be honest, your creditors do not care how you distribute your debt obligations between you when you split up, they just want to be paid, and they are supported by law.
Bottom lineIf you each were obligated to the creditor before the divorce, no matter how you decide to divide responsibility for the debt amongst yourselves, you are each still liable to the creditor after you part ways.
Should one the the ex-spouses discharge their debts by filing bankruptcy, the other spouse, who has not filed for bankruptcy will continue to be legally bound by the credit agreements and therefore liable for the debts, no matter what the marital settlement agreement said. To get rid of their debt liability, the non-filing spouse must either try to work something out with the creditors, or filing bankruptcy themselves is also an option.
Bankruptcy and Divorce invite many complex legal issues. Over next weeks and months I will be discussing the common issues faced in Bankruptcy and Divorce in my blog.
About the Author:
If you are considering filing bankruptcy, you probably have a few questions, please check out my FREE E-COURSE. Unique version for reprint here: Who Pays The Debt? Credit Cards In Divorce And Bankruptcy.
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