Unfortunately, it is very common for a person to need to file bankruptcy after a dissolution of marriage (divorce). There are certain debts that you cannot discharge, however, and you should know the rules and laws regarding debt you took on in your Marital Settlement Agreement or via a Court Judgment after a trial.
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Can I discharge marital debt?
After a Divorce (dissolution of marriage), people take on some marital debt in joint names, or even sometimes just in the other person’s name. You may not discharge out of marital debt in a chapter 7 case if said debt was distributed to you in a dissolution of marriage action; unless your former spouse is agreeable to the same OR you name is the only one on the actual debt.
Marital debt after a dissolution action may be dischargeable in a chapter 13 bankruptcy. If you want to discharge out of marital debt, this is something that should and could be done before having the dissolution action completed; it may be a good strategy to agree with your spouse to discharge the debt before the dissolution is finalized.
Can I discharge attorney fees?
You may not discharge attorney fees and/or other debts you are required to pay pursuant to your dissolution action under chapter 7 (where you discharge all your debt). However, under code 523(a)(15), claims and the related attorney’s fees are dischargeable in a chapter 13 case as long as the debtor makes all plan payments and receives a discharge. If the debtor does not make the payments and does not receive their discharge, the debtor will still owe the money.
Depending on the amount of debt involved, even if the debtor qualifies for chapter 7, chapter 13 may be a better option to get rid of that extra debt.
Unsure if Bankruptcy is the right step after a divorce?
Debt issues in the dissolution can create possible problems when filing after your divorce is final. For more information on how to resolve marital debt, you can contact Schwam-Wilcox & Associates. The firm practices both bankruptcy and family law, and we can guide you through either process. Fill out our Bankruptcy Consultation Form, and we’ll schedule you for a complimentary 30-minute consultation.
