Divorce And Bankruptcy: Credit Card Debt
After representing clients and filing bankruptcies for a good while, any Orlando bankruptcy lawyer, can share with you a sad truth: Filing bankruptcy and filing for divorce often go hand in hand. Bankruptcy lawyers help many individuals going through a divorce deal with their financial difficulties.
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.
What you need to keep in mind while addressing divorce and creditors, is that your spouse’s credit card companies, and your own are third parties to your divorce proceedings. In other words, you and your spouse are the only ones party to your divorce and therefore the only ones bound by the 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.
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.
If one ex-spouse subsequently winds up filing bankruptcy, then the liability for the debt for that spouse can be discharged. The other, non-bankruptcy filing spouse, remains liable for the debt. To eliminate that liability, the non-filing spouse can also file or settle the debt with the creditor if the creditor allows for that option (don’t hold your breath).
I intend to address some of the other legal issues that my clients face when discussing Divorce and Bankruptcy in the coming weeks and months 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. Free reprint avaialable from: Divorce And Bankruptcy: Credit Card Debt.