Bankruptcy Filer and Spouse: Liability of Joint Debts

When filing for bankruptcy, a debtor must resolve any issues relating to marital debts and assets, especially if a divorce is being contemplated or already has been finalized. Even if a debtor receives a discharge of his debts in bankruptcy court, the debtor’s spouse may still be liable for jointly incurred debts. For instance, how a jointly held credit card in both the debtor and his spouse’s name is to be paid off could become a serious issue. If the debtor files for bankruptcy and he receives a discharge for the credit card debt he incurred with his co-debtor spouse, this would likely only relieve him of the obligation he owes to the credit card company. Since the liability a debtor owes to most credit card companies is “joint and severable”, the co-debtor spouse will be left owing all of the debt to the credit card company. This may not be the case if the parties have been divorced prior to the debtor filing for bankruptcy. Generally, when a married couple divorces a property settlement is entered before a court and it outlines how the marital debts are to be paid off by the respective parties. This has the same affect as a judgment being entered against the debtor by any other creditor and could make an otherwise dischargeable debt non-dischargeable. If the property settlement is silent on the matter, resolving how the debt is to be paid off could be very difficult. If you are considering filing for bankruptcy you will be addressing many issues concerning the dischargeablity of your debts and should consult with an experienced bankruptcy attorney immediately in order to protect your rights. If you are considering bankruptcy or divorce you should seek experienced legal counsel immediately in order to fully protect your rights. For more information on foreclosure, bankruptcy or other consumer debt related matters in New Jersey visit TheNJBankruptcyAttorney.com. This blog is for informational purposes only and in no way intended to replace the advice of an attorney regarding your specific matter.