The Impact on Filing Bankruptcy on your Ex-spouse
Divorce can be a distressful emotional experience and it might be difficult for the couple to withstand the painful reality. Financial stress and lack of communication are primary reasons for separation among US couples. Does filing a divorce petition help to revive your financial situation? The answer is undoubtedly no. You need to keep in mind that if you haven’t managed the jointly held debts during the divorce, then you might complicate your financial situation. You’ll be associated with your ex-spouse unless you pay off your debts or file bankruptcy. Fortunately, your ex-spouse’s name on your current account will not hinder your ability to file bankruptcy.
Is bankruptcy beneficial to give a fresh start to individual recently gone through a divorce?
Filing bankruptcy can help give a fresh start to people who have gone through a divorce recently due to financial crisis. You can terminate your marriage while filing a divorce petition but will not be able to get rid of your financial obligation incurred jointly. If you co signed on a credit card with your ex-spouse then you might be obligated to pay for the debt incurred on the card; even though the couple is legally separated. You can surrender your jointly held debt when you file the bankruptcy petition with the court and get an opportunity for a fresh start.
When you file for bankruptcy, your debts will be discharged but the creditors might approach your ex spouse to collect the debt. Therefore, the separated couple can file jointly to avoid creditor harassment.
Effect of chapter 7 bankruptcy on ex-spouse:
Your ex spouse will be liable to pay for the debts incurred jointly on the credit card if you file chapter 7 bankruptcy. If you file under chapter 7 bankruptcy or liquidation bankruptcy, then your non priority debts will be discharged. According to the bankruptcy code, the filers can’t discharge their priority debts. Student loans, child support and alimony are included in the priority debts that can’t be discharged through bankruptcy. Your exempt property will be liquidated to discharge your non priority debts. If you file under chapter 7 bankruptcy, then you can lose your assets. Te court appointed trustee can’t sell exempt assets to pay off the creditors. It will be beneficial to file bankruptcy to discharge the debts incurred jointly by a couple after marriage if they have more non-priority debt than priority debt or more exempt assets than non-exempt assets.
Effect of chapter 13 bankruptcy on ex-spouse:
If you file chapter 13 bankruptcy then you can avoid associating with your ex-spouse on your joint debt. The court appointed trustee will design a repayment plan in accordance with your financial situation with a three to five-years term. The remaining unsecured debt at the end of the term like jointly held credit card debt will be discharged.
Unlike the Chapter 7, your ex-spouse is not liable to pay the remaining balance. But remember that the bankruptcy court will approve your repayment plan under chapter 13 if you have a stable income to maintain the payments.
You cannot discharge your domestic support obligation through bankruptcy. Domestic support obligation is inclusive of child support and alimony. You are required to pay for the divorce related debt incurred through child support or alimony even after filing for chapter 7 bankruptcy. In a divorce petition, if a judge compels you to pay for certain joint debts then you’ll not get discharge on these debts in chapter 7 bankruptcy. But you can file chapter 13 bankruptcy to discharge these obligations.
Author Bio: Paulette Noonan is a regular writer with the Debtcc community and is also a contributing writer with other financial sites. Expertise is woven around various aspects of the debt industry and with her e-books she tries to impart to people the different situations and simple solutions to get out of difficult situations.