Most couples tend to accrue shared credit card debts while married. Even if the divorce order says one spouse should shoulder the debts, the arrangement may not be enough if the other spouse files for bankruptcy. You could receive a letter from a creditor if your ex-spouse files for bankruptcy after the divorce. Understanding the relationship between bankruptcy and divorce can benefit you financially.
Divorce orders do not change your agreement with creditors
If you have recently divorced, the court can determine which spouse will be held accountable for the payment of a specific credit card, loan, or other form of debt. However, the legal obligation placed on the spouses during the divorce will not alter the agreement between the creditor and the debtor.
Both spouses who have signed an agreement with the credit card issuer are liable for their obligations unless the debt has been refinanced or another arrangement has been made. This is because the creditor did not participate in the divorce proceedings.
What happens if your ex files for bankruptcy?
Should your ex-spouse file for bankruptcy and discharge their personal responsibility to a jointly held credit card, the creditor may still be able to sue you for any outstanding balance since you are responsible for the credit card, too.
To illustrate, consider a situation where the divorce order obligated your ex to pay off a joint credit card. If your ex gets a bankruptcy discharge, the credit card issuer may then try to make you repay the debt. This will most definitely be an unpleasant experience for some divorced people who thought that the debt was entirely assigned to their ex-spouse.
Can you recover money from your ex?
Your ability to get reimbursement will be determined by a number of factors, such as your divorce decree and the nature of your ex’s bankruptcy.
Certain responsibilities generated during the divorce process have special status under the Bankruptcy Code. Nonetheless, all cases differ, and identifying your possibilities can involve an analysis of your divorce decree and your ex-spouse’s bankruptcy process.
A Danville bankruptcy lawyer can provide you with proper assistance in this matter.
How to protect yourself
If you are in the process of getting divorced or have just completed the process, you can do certain things to minimize your risks in the future:
- Refinance or close any jointly held credit card accounts where possible
- Have any authorized users removed from any account that is not shared
- Check your credit report periodically for any late payments or collections
- Always have a copy of your divorce settlement and other financial arrangements
- Contact an attorney immediately if your ex-spouse declares bankruptcy
A Danville, IN, Family Lawyer Can Help You Understand Your Rights
Bankruptcy often follows divorce, and it’s important to know how your spouse’s bankruptcy filing will impact your financial future. Chris Arrington helps Danville couples with bankruptcy and family law matters. Call our office today to schedule an appointment, and we can begin discussing your next steps right away.