After going through a divorce, many people assume they will not have to worry about the financial situation of their ex-spouse. Often, this is the case; however, there are certain instances when the financial situation of an ex-spouse can negatively effect a person.
This issue often arises when an person’s ex-spouse files for bankruptcy. A common misconception that individuals have is that anything stated in the divorce decree regarding joint debt is binding. This, unfortunately, is not true. If your ex-spouse agreed to assume the debt that was in both of your names in the divorce decree, but then decides to file for a Chapter 7 bankruptcy, you will then be responsible for the debt. Creditors can go after both parties for joint debts, so if your ex is protected by a bankruptcy filing, creditors can and will go after you for the debts, despite what your divorce decree has listed. Simply not paying the debts based on the divorce decree is not an option; creditors can also pursue civil judgments against the non-filing spouse and potentially garnish wages to satisfy the judgment and the debt. This can apply to a variety of debts including anything from a small credit card to a home mortgage deficiency.
People also come across issues regarding credit scores. Typically speaking, if your ex-spouse files for bankruptcy, your credit score will not be affected. However, if you and your ex-spouse still share accounts, this may not be the case. Similar to how creditors can go after you for joint debt, a bankruptcy filing by your ex-spouse can show up on your credit report if you continue to share accounts. It is imperative that you separate accounts and debts so that you will not be negatively impacted by your ex-spouse filing for bankruptcy.
What, then, are your options if your ex-spouse files for bankruptcy and you have joint debt? This is a tricky subject, because as previously stated, your creditors can begin attempting to collect the debts from you. You could attempt to sue your ex-spouse in civil court for breaching your divorce agreement; however, if your ex-spouse is filing for bankruptcy, chances are that he or she will not have any extra money or assets that you would be able to collect in a settlement. Your next option would be to simply assume the debt and begin paying it off. However, if it is a large amount of debt and you are unable to pay it, you may consider also filing for bankruptcy. While this option may not have been something originally considered, filing would wipe out any unsecured debt, like credit card bills, that creditors would be attempting to collect from you. Like your ex-spouse, you would no longer be responsible for paying off those debts.
If you have questions about how you will be effected by an ex-spouse filing for bankruptcy, contact a St. Louis Bankruptcy attorney today!