Divorce And Bankruptcy: Credit Card Debt
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.
The most important thing to remember when discussing divorce and credit card debt, is that the only ones party to your divorce are you and your spouse. That is, a third party, like your and your spouse’s creditors, are NOT part of your divorce proceedings and consequently, are not obligated to abide by your marital settlement agreement.
When separating, it is common for people to assign which debts each spouse will be responsible for after the divorce is finalized. These terms are often memorialized in a marital settlement agreement. This agreement legally binds the parities seeking the split-up to the terms included in the agreement. However, each spouse’s creditors rely on the credit card agreement, the car loan, the house loan, etc., that each spouse signed with the creditor at the time the credit was issued. Frankly, creditors could not care less how you decide to divide the debts between the two of you when you part, and the law is on their side.
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.
Hence, when one spouse discharges their liability for the debts by filing bankruptcy, the other non-filing spouse will continue to be responsible for it. In order to remove that responsibility, the non-filing spouse can attempt to settle the debt with the creditors in question, or end up filing bankruptcy themselves.
The legal issues surrounding Bankruptcy and Divorce are many and complicated. In the coming weeks and months I hope to touch on some of the more common issues my clients face when dealing with these two legal topics on my blog.
In the meantime, feel free to check out my FREE E-COURSE which offers an Orlando bankruptcy lawyer’s advice on some common issues confronting people who are considering filing bankruptcy. Unique version for reprint here: Divorce And Bankruptcy: Credit Card Debt.
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