Post-Divorce Bankruptcy

Bankruptcy after divorce

Filing for bankruptcy after divorce can have several complications depending on what the terms of the divorce were and whether you live in a community property state. Post-divorce debt is usually divided between the parties by a divorce judge.

Personal Bankruptcy

There are two types of personal consumer bankruptcy, Chapter 7 and Chapter 13. Both types of personal bankruptcy allow a debtor to discharge any unsecured debt such as credit cards or medical bills. If a debt is in more than one person's name and one of the co-debtors files for bankruptcy, the debt then becomes the responsibility of the co-debtor unless they too file for bankruptcy.

Divorce and Debt

Divorce has many consequences on a household, including the household's debt. Many married couples have joint credit cards and bank accounts, making the debt the responsibility of both spouses. It is generally recommended a bankruptcy proceeding be completed before a divorce if possible to simplify the bankruptcy proceeding.

Community Property States

Several states are community property states where all assets and debts of the marriage are considered both spouse's responsibility, even if that property is only in one person's name. If one spouse has a credit card in just their name and the couple gets divorced, the other spouse may be responsible for their ex-spouse's debt.

Filing after Divorce

If a couple decides to divorce before filing for personal bankruptcy, it is best to visit an attorney to make sure all documents are completed correctly and to see what consequences the filing will have on the other spouse. If you know your ex-spouse will be filing for bankruptcy, see an attorney to see if you will become responsible for any leftover debt.

References

• United States Bankruptcy Courts: Bankruptcy Basics
• Bankruptcy and Divorce

Resources

• Community Property States