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Divorce and Bankruptcy: What You Need to Know if Your Ex-Spouse Files for Bankruptcy

Going through a divorce can be emotionally and financially painful. And if your ex-spouse files for bankruptcy, it may become an even greater stress because it can negatively affect your financial stability. Divorce and bankruptcy can have an impact your financial situation in different ways, depending on your ex-spouse’s new circumstances.

Bankruptcy allows debtors (individuals or businesses) who owe creditors more money than they can afford to pay to manage their debt in an orderly fashion through court intervention. Individual debtors can file for bankruptcy under Chapter 13 or Chapter 7 of the Bankruptcy Code. The U.S. Courts website explains that Chapter 13 bankruptcy is a repayment plan of debts over a period, and that Chapter 7 bankruptcy eliminates—or discharges—most or all of the bills. Once the debtor files for bankruptcy, creditors are ordered to stop all collection activity, which is called an automatic stay.

Here are three things to consider when going through a divorce and bankruptcy, including what you should do to protect yourself and your financial stability.

Joint or Cosigned Credit Obligations

If your ex-spouse files for bankruptcy, you will be responsible for the debt if you are a joint owner or cosigner. The lender can require you, as a joint owner or cosigner, to make payments on a loan if your ex-spouse declares bankruptcy on the credit.

“Unfortunately, the creditors don’t care what your divorce agreement stated,” says Justin Harelik of Bankrate.com. “You are still responsible to pay on this debt even if your [ex-spouse] fails to pay. The divorce agreement does not wipe out your responsibility to pay, only that you can force another person to do so.”

Be prepared to pay the loan in the event that your ex-spouse stops paying or is discharged from the obligation to pay the debt through the bankruptcy. Contact your divorce attorney to discuss your legal options.

Alimony and Child Support

Closeup of hundred dollar bills with Child Support note

Under the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005, alimony and child support payments must be paid before all other creditors, including taxes. Even though alimony is not dischargeable, this doesn’t mean you will continue to receive the same amount you did before your ex filed for bankruptcy. In most states, alimony obligations can be modified if the ex-spouse submits a request to the bankruptcy court. The bankruptcy court may determine a new amount or establish an agreement with you based on your ex-spouse’s petition.

There are some rare circumstances in which alimony can be discharged, so be safe and contact your divorce lawyer to ensure your alimony or support payments are protected.

Your Credit Report

Good Credit Score

Your credit may not be directly affected by your ex-spouse’s bankruptcy filing because your credit score is separate and distinct from your ex-spouse. However, if your ex-spouse was discharged from the obligation of a joint-owned or cosigned debt, the creditor has the right to demand payment from you. If you don’t pay the debt, then your credit could be negatively affected.

In rare cases, the creditor may inadvertently notate the filed bankruptcy on the non-filing spouse’s credit report. If the bankruptcy notation is on your credit report, dispute the notation with the credit reporting agencies, Trans Union, Equifax, and Experian. If your ex-spouse files for bankruptcy, it is recommended that you review your credit report for errors six to nine months after they filed.

Addressing these three things will help you be proactive in protecting your financial stability.

Consumer Education Services, Inc. (CESI) is a non-profit committed to empowering and inspiring consumers nationwide to make wise financial decisions and live debt free. Speak with a certified counselor for a free debt analysis today

 

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47 Responses to Divorce and Bankruptcy: What You Need to Know if Your Ex-Spouse Files for Bankruptcy

  1. Mike says:

    I accrued debt after I split with my Ex-wife so she is not tied to any of those debts except that on the application I stated I was married. Then I lost a lot of hours at work and had trouble paying the bills and i am forced to consider bankruptcy. We are still in the process of getting the divorce filed but she is concerned that she will be held responsible if I file bankruptcy. Can anybody give me a definite answer on how to avoid her being affected? Thank you

    • Tracy East says:

      Hi Mike: that’s a great question, and honestly, one that would best be answered by a bankruptcy attorney. We’d love to hear the response and how your situation was resolved – be sure to check back and let us know!

    • Stephanie dove says:

      What a good man thinking about his wife’s needs even if it is over. So many narcissistic men want to destroy the ex. God bless you

  2. NormaJ says:

    My bf ex wife has claimed bankruptcy, now I wonder does the child support still go to her directly or does my bf have to give it to whoever is in charge of her bankrupt stuff, currently she is demanding all child support to be in cash only, also technically they aren’t divorced yet, the courts denied the divorce, and it’s been 3 years since they split, they just haven’t bothered to get along enough to go get the divorce finished

    • Tracy East says:

      That is an excellent question – if they are still legally married and she is declaring bankruptcy, I would have your boyfriend consult an attorney to make sure his interests are represented. It’s much better to be safe in this situation. Best of luck!

  3. Lori Lamanno says:

    My EX of 7 years ago filed a Chapter 13. I am assuming he has finished paying the Trustee and now they are coming after me for the remaining balance of his vehicle that he still owns. Our decree indicated that he was responsible for his car and I was responsible for mine, but I am reading that doesn’t protect me, is that correct? Am I responsible for the remainder of the loan

    • Tracy East says:

      Legal issues are difficult to answer in a comment – If your decree clearly states that you are not responsible for any of his debt, it’s possible that this will cover you. That said, it is always safest to consult an attorney on legal matters. Let us know how it works out!

  4. Courtney says:

    My boyfriend’s ex wife is filing for bankruptcy and her name is still on their second mortgage. Will this negatively impact him? And if so how?

    • Tracy East says:

      Hi Courtney – it is best for your boyfriend to ask his bankruptcy attorney specific details like how an ex-spouse on a mortgage will impact his bankruptcy filing. His attorney will know all the particulars of his financial situation and will be able to give him a much more clear and specific answer. Best of luck to you both!

  5. Rich says:

    A friend of mine is behind on child support a enormous amount of it honestly and his ex (never married) filed a chapter 7 with her husband in state of Indiana. My question is did his back support get whipped from the day she filed the bankruptcy to the last payment he made to her if so why is his balance still around $33,000? And I have one more question pertaining to this same situation he was ordered suppervised visitation and caught up on all his child support did everything he was ordered to do and she didn’t comply with the court order and was forced to take matters to court, does child support stop when it goes back to the courts?

    • Tracy East says:

      Those are great questions Rich! I wish we could definitively answer them for you, but those are questions that would best be answered by an attorney with knowledge of the particulars of your friend’s situation. I wish them the best of luck – and thanks for looking out for your friend! 🙂

    • Kimberly says:

      I am in California, Child Support does not get wiped out by Bankruptcy. Child Support does not stop, even while waiting to go back to court.

  6. Kim says:

    My husband filed for bankruptcy after divorcing his 1st wife in order to get out of the mortgage to the home they shared. He just received a phone call from his bankruptcy attorney asking for his permission to allow them to do a bankruptcy for his ex-wife. Is this normal? Is there a possible reason for him to be concerned?

    • Tracy East says:

      That’s a great question Kim! I’m not sure of the legal answers – those are best answered by his attorney. If he’s working with a bankruptcy attorney, he should get great legal advice 🙂

      Best wishes to you both!

  7. Lynn says:

    I was awarded my car in the divorce. However, my car has always been in just my ex husbands name, and I took responsibility for the debt in our divorce but the car is still, in just his name. My ex husband is now filing bankruptcy. How might this affect my ability to keep my car since it is in his name only? I have paid all payments on time and it is current.

    • Tracy East says:

      That’s an excellent question, Lynn. You should seek the advice of an attorney that specializes in bankruptcy about the situation since the car is legally in your ex husband’s name. Let us know how it turns out!

  8. Patricia says:

    My daughters soon to be ex filed chp13. They had bought a jeep with his name on the vehicle with her as a co signer. The finance company stopped accepting payments, and red flagged the vehicle. She tried over and over to get a account number and address to send payments. Well now they want complete pay off and she had saved the payment money but it’s no way enough for pay off. What can she do? They want the money asap or reposses her vehicle.

    • Tracy East says:

      That sounds like such a stressful situation Patricia. Your daughter would be best served to speak to an attorney who specializes in bankruptcy following divorce. A lawyer will be able to give her very specific guidance related to her situation and her rights. We wish her the best!

  9. Lynn Kita says:

    My ex is filing for bankruptcy after being devoriced 5 yrs. The house montage and my car are in both names.his name is not on the deed. And i was granted both in the devorce .and have been making the payment on both on time. Will the ex filing hurt me on any way?

    • Tracy East says:

      Lynn – It’s hard to say legally without an attorney. I would check with your own attorney or have your ex-husband check with his Bankruptcy attorney. That’s the safest way to get an answer that will bring you peace. Best of luck!

  10. margie says:

    my vehicle is under my name and my ex is the co signer I was awarded the vehicle in my divorce and he was to pay the monthly payments for the car. A year now after the divorce he is going to file for bankruptcy and is looking into modifying the divorce so that he can include the vehicle in the bankruptcy. Can he do that and what will happen to my credit if the car is repossessed. I have a part time job and cannot afford the monthly payments. Any advice?

    • Tracy East says:

      Margie – that’s a more complex question than I can answer. I would advise speaking to your divorce attorney about the situation and what your rights are in this case. Best of luck – let us know how it turns out!

  11. Clarissa says:

    I file Bankruptcy , I have a savings account at a credit union and my Daughter name is on it too. I have a Credit Card with the Credit Union in my name only. will they make my Daughter pay.

    • Tracy East says:

      Clarissa – unless your daughter is on your credit card account or linked to it in some way she should not be responsible for any charges on that card. If it is in your name only, she should not have any issues.

  12. Dale Beers says:

    My ex and I have been divorced for 10 years now. Court order is we split children medical costs 50/50. It has been working as far as I knew until recently. She filed for Chapter 13 bankruptcy I found out recently. I had been writing her checks to cover my part of the medical bills she said she accrued. However, I found 2 collections on my credit score. Called the collection agency and paid the debt. Now my credit has dings on it and my ex says she is not going to reimburse me for her half of what I paid to settle the collections because she wrote them off in her bankruptcy.. Is there any recourse for this now that I am out the the costs of the debt and my credit score has been damaged?

    • Tracy East says:

      Dale – So sorry you’ve been having these issues! I don’t know what your legal recourse is in this situation – a lawyer would be in the best position to answer this from a legal perspective. You did the right thing by addressing the collections so they didn’t continue to impact your credit, but I’m sure it must be frustrating to feel like your divorce agreement isn’t being honored. Let us know how you are able to resolve the situation – best of luck!

  13. Mildred Robinson says:

    My husband filed chapter 13 before we moved to Arizona. He had a house that was foreclosed on. We both had property that recently sold. The property that Was recently sold was my house basically I paid the mortgage and all repairs on the house my husband didn’t pay anything. I agreed to split the proceeds from the sell of the house with him anyway , but now I am afraid I will not get anything because he filed chapter 13 and foreclosed on his property. What do you suggest I do.

    • Tracy East says:

      Hi Mildred – in situations like these, it’s always best to get legal advice from your attorney who will know all the intricacies of the laws in your state regarding your divorce and this bankruptcy. Best of luck finding resolution. I’m sure you are anxious to have this matter settled!

  14. jess brown says:

    every single answer on this thread is: Go ask an attorney. Why even bother asking anything here? No advice or suggestions will be given.

    • Tracy East says:

      Hi Jess! Since we are not legal professionals, we are able to give general guidance that is educational in nature, but we are not permitted to give any detailed advice that is legal in nature or that may contradict the legal advice a licensed attorney would provide. Thanks for understanding. Best wishes!

  15. Tracy says:

    My husband and I are separated not legally that I know of. Just found online where he has filed chapter 11. I am an authorized user on some credit cards am I responsible as well? Also, how will this affect the divorce?

    • Tracy East says:

      Hi Tracy – those are excellent questions. Since you don’t have a legal separation agreement or a divorce decree, I would definitely suggest that you seek the advice of a divorce attorney who can advise you on your rights and how to protect yourself financially through this process. Best of luck!

  16. nicole says:

    My ex-boyfriend and I purchased two vehicles together he has file a chapter 13 and kept the vehicles is there anyway to get one of the vehicles.

  17. Leann says:

    Been married for 20 years my husband is on everything I’m not o. Anything if he files for bankrupsy will I still get alimony I have never worked 55 years old now he is 65 . The house is homesteaded so I can’t get anything there as I understand

    • Tracy East says:

      Hi Leann – Be sure to check with a divorce attorney on your rights in this particular situation. Some of it may depend on the laws in the state where you reside. Best of luck!

  18. Liz says:

    I am thinking of filing for bankruptcy and have been divorced for a yr. All things that will be on the bancruptcy are in my name only. Will that affect my ex husband?

    • Tracy East says:

      Liz – If everything you are including in your filing is soley in your name, it should only impact you. That said, since I’m not an attorney, this is an excellent question to ask your attorney when you have a Bankruptcy consultation. They will be able to give you all the answers you need.

  19. Brenda says:

    My Husband declared Bankruptcy, my issue is he never included me.
    He had a credit card to which I signed as well.I thought it would help my credit because I never worked due to my disability and don’t receive a disability check because of my disability. Is there any I can do!!!! They are always calling me and I keep telling them I have no income I can’t work…I keep hoping that maybe just Maybe I might win money to pay them.So is there anything I can do, or do I just have to pay it.
    Thanking-you in advance.

    • Tracy East says:

      Hi Brenda – Consulting with your divorce attorney about your legal rights and obligations regarding shared debt from the divorce settlement is your safest course of action. They should be able to give you the best advice for your unique situation and the laws in your state. Best of luck!

  20. Nicole Hendrick says:

    My divorce has been final and my ex husband has remarried. There are 2 things we are still tied together to. An RV loan and a credit loan. He has both the RV and credit card and has been making payments. I have no access to them and are not in my possession. He recently is now late and past due. I asked if he would refinance both loans to get my name off and he says he can’t. I do not make a lot of money and if I need to finance something I will have a hard time because of the loans out already. I want out of them and start new. Can I file chapter 7 to not be held responsible? Also, if my car is paid off I will be able to keep it?

    • Tracy East says:

      Hi Nicole – if you are considering bankruptcy as an option, it is important to consult a bankruptcy attorney in your state to answer all of your questions about what you can and cannot discharge in a bankruptcy filing. We wish you the best of luck resolving your situation – let us know how it goes!

  21. Todd Cowan says:

    Prior to Me and my X divorcing we filed a Chapter 13. We are now Divorced and I am paying the 100% repayment plan. She has sued me for Petition To Partition Community Property. The Bankruptcy was in my name only but a lot of the included debt was in her name. Her Attorney is saying that she is not responsible for any of the Chapter 13 repayment because it is in my name. Louisiana is a Community Property State.

    • Tracy East says:

      Hi Todd – I’m sure that’s a very frustrating and stressful situation. If you have a bankruptcy attorney, you might want to consult with them to make sure that the information you are being given is all accurate. Let us know how it is resolved.

      • GARY LYNN EASLEY says:

        Tracy East you can not answer any one questions. All you do is say good question talk to an Attorney. your no help.

        • Tracy East says:

          Hi Gary – thanks for reaching out. As a non-profit credit counseling and education provider, we are not licensed to give any type of legal advice. It’s always best to seek the counsel of a Bankruptcy Attorney for specific questions or advice about a situation that isn’t general in nature.

  22. Millie Hue says:

    I never knew that the creditors are ordered to stop asking their debtors for payment when a person files for bankruptcy. I heard that the ex-husband of my friend will be hiring a lawyer to help him out file for bankruptcy since his business is decreasing in sales. My friend told me that it started happening since the supermarket in their area opened. Thanks for the information!

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