The Division of Marital Debt When Your Ex Files for Bankruptcy Protection

Suppose that you and your ex had joint marital debt, and you negotiate a property settlement that requires that your ex pay off certain obligations that were jointly incurred. After the divorce is final, your ex files for bankruptcy protection, preventing the creditor from seeking to collect the debt other than through the bankruptcy court. Will this have any impact on you? Can the creditor seek to collect the debt from you?

Even though a state court may have ordered that your ex is responsible for paying off a joint obligation, the creditor can nonetheless seek to recover the full amount from you; between you and the creditor, you are still responsible for the debt, regardless of your former spouse’s obligation to pay the debt. One way to protect yourself is to file your own petition for bankruptcy.Though this may be undesirable, it may be the only way to avoid liability for the joint debt. Another option would involve paying the debt and filing suit against your ex to recover the balance. However, if your ex files for bankruptcy,they may be able to wipe out their obligation to pay you back for paying off the debt they were supposed to pay. If your ex files a bankruptcy, you should speak with a bankruptcy lawyer to ensure that your rights are protected.

Contact John Hargrave and Associates

We have provided comprehensive counsel to individuals in and around Barrington, New Jersey, since 1977. To schedule a free initial consultation, contact our office by e-mail or call us at 856-547-6500.