Can I discharge debts from my divorce settlement?
Often times we meet people at the end of their financial rope. Many people do not meet with a bankruptcy attorney for many months, or even years, after they began thinking about filing for bankruptcy. It seems like a scary and daunting process. What many of our clients don’t really know until they’ve talked to us is that in many cases bankruptcy gives people a breath of fresh air and our clients tell us that they can finally start moving forward. We also know that a number of different circumstances lead people to file for bankruptcy. Many financial issues can be addressed in bankruptcy. There are ways to keep your house and car in almost every situation. We will work with you regarding any other property and how to deal with those issues. However, all of that being said, there are some issues that can become complicated by bankruptcy.
We’ve discussed before that debts can be discharged, even when ordered by a court, in personal injury situations. In fact, that is a very common reason for filing for bankruptcy. However, there are some situations that we need to discuss in more detail.
If debts that are owed were divided in any type of separation agreement or divorce we need to know that right away. For example, if a husband and a wife divorce the two usually allocate property and debts between the pair. This ultimately results in a court ruling to that end. If the husband later files for bankruptcy and his debts are discharged the creditors cannot continue to attempt to collect from him. However, if the debts were joint, the creditors may attempt to collect from the wife. As she has not filed for bankruptcy that would be perfectly legal as far as the creditors are concerned. However, it is important to understand that the husband may be found to be in violation of his court order and may even be found in contempt of court. The wife may be able to sue the husband for any amount she paid towards the debts allocated to him in the divorce.
Don’t despair just yet. There are some options available to you in this situation. Please remember, however, that these are only general options and they may or may not work in your situation. It is imperative that you come speak with us personally. In some cases spouses file together in preparation for divorce to give both parties a clean start. In other cases we can look at a repayment of all debts with a structured payment plan to ensure compliance with the previous court order. No matter the situation, there are options and we can help.
If you have questions about this, or any other bankruptcy matter, please contact your St. Louis Bankruptcy Attorney today!