Credit Card Liability In Divorce And Bankruptcy

September 2nd, 2010 | Posted in Debt Relief

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.

Bankruptcy and divorce are so intertwined, and the issue comes up so often with my clients, that I’ve decided to devote several articles to deal exclusively with this subject. In this article, I’ll discuss how filing bankruptcy and filing for divorce effects the credit card debt that each spouse may have.

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.

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.

You see, in the end, no matter how you and your ex determine who is taking over which debt, if you each signed the credit agreement, you will each continue to be responsible for the debt.

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.

If you are considering filing bankruptcy, you probably have a few questions, please check out my FREE E-COURSE. Free reprint avaialable from: Credit Card Liability In Divorce And Bankruptcy.