Divorces can be very complex, especially when there are major financial obligations, property and debts to divide. The situation can get very messy when there is a huge financial loss at stake for one or both parties. One of the biggest myths about getting divorced is that you can pass on your debt to the other party. This is simply not true. Without question, you can divorce your spouse, but what happens to those debts that you incurred while married?

Both spouses are responsible for those debts. During a divorce, your assets and debts are divided but that does not mean the creditor has to be bound to the person the debt is assigned to. If the debt was acquired during the marriage, a creditor can go after both parties, even after the divorce is finalized. Additionally, if one of the parties files for bankruptcy after the divorce, guess who the creditor will contact for payment?

Why am I responsible?

When incurring debt while married, creditors take into account both parties and their financial situation. Although you may have incurred individual debts without the knowledge of your spouse, the obligation is viewed as a responsibility of both.

Unfortunately, when becoming responsible for that debt, your financial situation may take a downward slide, also forcing you into bankruptcy. If there is a good chance that one party may file for bankruptcy and severely impact your financial situation, it may be a good idea for you both to file for bankruptcy prior to the divorce becoming final. This will put you both on level ground and the property can be equally divided.

A spouse can discharge a property division obligation in lieu of financial support if agreed between the parties, but if the ex-spouse objects, the debt will remain. Any financial obligations or discharges will have to be reviewed by the bankruptcy court prior to any agreements.

How will this affect my divorce?

If you file for bankruptcy while going through divorce proceedings, your assets and liabilities will become affected until the bankruptcy is complete. You can start both proceedings in conjunction, but the bankruptcy will take precedence.

If one spouse is more financially stable than the other and fears the financial ramifications of being responsible for debt if their ex files for bankruptcy, this should be addressed when going through the divorce proceedings. Understanding your financial obligations as it pertains to repayment of outstanding debts is crucial. If you know your ex-spouse will be in a hardship state, understanding the bankruptcy laws will also work to your advantage. The main thing is protecting yourself before, during and after the divorce proceedings are over.

If you and your ex are not on good terms, you definitely need an attorney to walk you through the process. If you and your ex get along, filing for bankruptcy prior to a divorce can be beneficial to you both and may wipe out all joint debts and increase your exemptions.

A good family law attorney can help you transition through your bankruptcy and divorce proceedings whether you are on good terms with your ex-spouse or not. Knowing your rights and responsibilities is very important to putting yourself on solid footing to move forward. For more information on bankruptcy and divorce, contact the Copeland Law Firm to get the assistance you need today!