Not many people know that 1st May is celebrated as the Law Day in the country. Instead of talking about the contests and events that will take place on that day, I have decided to discuss about an important aspect of law which many people aren’t aware of.

Today, I’m going to talk about what happens to divorce debt when an ex-spouse files bankruptcy - a subject on which I have received lots of questions in various forms in the last few years. Both divorce and bankruptcy are big events and their repercussions are massive. So it makes sense to be aware of this aspect of law for the married couples and the ones who are going to be hitched soon.

Just imagine a situation: your ex-spouse files for bankruptcy after the divorce has been finalized. Your former spouse has filed bankruptcy to pay off a jointly owned credit card. You have never used that credit card for purchasing anything. Now, the credit card company is asking you to pay off the full balance. What will you do now? What does the law say? Can you escape this situation smartly? Let’s find out.

What does the law say regarding bankruptcy and divorce debt?

Honestly speaking, there is no easy way out of this messy situation. Bankruptcy law states that all debts owed to ex-spouse awarded in the divorce can’t be discharged and should be paid in spite of filing bankruptcy. For instance, domestic support obligations like child support, property settlements and alimony can’t be discharged in bankruptcy.

In this hypothetical situation, your spouse has filed bankruptcy to eliminate his/her liability to pay off credit card debt. In this case, you (the non-filing spouse) is still liable for the credit card debt. However, if both of you file bankruptcy, then debt will be discharged for both parties.

What is a co-owned or a jointly owned credit card?

Jointly owned or a co-owned credit card creates a big problem when spouses file bankruptcy. Understanding the basics is extremely important since you can’t deal with this debt smartly in divorce or bankruptcy.

A jointly-owned credit card is the one where the names of 2 spouses are there. For instance, if you and your spouse have opened a joint credit card, then it means both of you are equally responsible for the debt incurred. It doesn’t matter who charges on the credit card and how much. Both of you are 100% accountable for the charges incurred on the credit card until it has been repaid completely.

Most couples don’t think about divorce or its financial repercussions at the time of exchanging wedding rings. Neither do they think about filing bankruptcy at the time of applying for a joint-credit card. But with the rising number of divorce cases in the country, it’s high time people start thinking about it.

What can you do if your ex-spouse files bankruptcy?

Check your divorce agreement first. If your ex-spouse agreed in the divorce decree that he/she will pay off the debt, then you have to go to the family court to enforce the divorce agreement and fight with him/her in the bankruptcy court as well. And yes, you can do that even after your ex-spouse has completed his/her bankruptcy.

Remember, a divorce decree outweighs the bankruptcy discharge. But it is equally true that you have to fight a legal battle to enforce the divorce agreement.

Knowledge is power. There is no point in celebrating Law Day if we aren’t of the basic rules in the country. I hope this article has addressed the subject of divorce debt and bankruptcy quite well. If you have more questions on this subject, then ask your questions here. If you have any other feedback, do share it here.

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