Filing for Bankruptcy after Divorce

Filing for Bankruptcy after Divorce

Filing for Bankruptcy after Divorce Property division and support agreements are part of many divorces. Divorce can cause serious financial burdens for ex-spouses. Filing for bankruptcy may help alleviate some of that debt. However, bankruptcy will not discharge financial obligations that you agreed to in your divorce degree. In Columbus, Ohio, family law attorneys know that spouses often threaten to file for bankruptcy.

 

You Still Owe Child Support and Alimony

If you owe your ex-spouse past-due alimony or child support as part of your divorce decree, a Chapter 7 or a Chapter 13 bankruptcy won’t erase these debts. In fact, the bankruptcy court won’t grant you a Chapter 13 discharge, finalizing your case, if you still owe past-due child support or alimony.

TITLE 11. BANKRUPTCY § 523 of the code provides:
A discharge under section 727, 1141, 1228(a), 1228(b), or 1328(b) of this title [11 USCS § 727, 1141, 1228(a), 1228(b), or 1328(b)] does not discharge an individual debtor from any debt such as those related to domestic support obligations; to a spouse, former spouse, or child of the debtor and not of the kind that is incurred by the debtor in the course of a divorce or separation or in connection with a separation agreement, divorce decree or other order of a court of record, or a determination made in accordance with State or territorial law by a governmental unit unless—

(A) the debtor does not have the ability to pay such debt from income or property of the debtor not reasonably necessary to be expended for the maintenance or support of the debtor or a dependent of the debtor and, if the debtor is engaged in a business, for the payment of expenditures necessary for the continuation, preservation, and operation of such business; or

(B) discharging such debt would result in a benefit to the debtor that outweighs the detrimental consequences to a spouse, former spouse, or child of the debtor

Bankruptcy Can’t Eliminate Certain Divorce Debts

Your divorce decree might order you to make payments to your spouse in exchange for property. You can’t wipe these out if you file for Chapter 7 bankruptcy but, if you file for Chapter 13, you can usually roll them into your payment plan. With a Chapter 13 bankruptcy, you give your trustee your extra income each month, after you pay your necessary bills, and the trustee distributes this money among your creditors, including your ex-spouse. At the end of your Chapter 13 plan, if you still owe money to your ex-spouse, that portion of the debt is usually eliminated.

You May Still Have to Pay Joint Debts

If you have to pay certain debts as part of your divorce decree, you might think about filing for bankruptcy to wipe them out. Your creditors can’t come to you for payment if you file for bankruptcy after your divorce, but they can still look to your ex-spouse for payment of debts you signed for together. An ex-spouse who has to pay these debts even though the divorce court ordered you to do it can usually take you back to divorce court. Often, the court will order you to pay her back – or you’ll end up paying the debts anyway.


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