Bankruptcy’s effect on divorce proceedings
After the new bankruptcy code amendments in 2005, a spouse is liable to another spouse for any debt arising out of a separation agreement or divorce decree. During a divorce action, the debts are divided up “equitably” between the parties, but the parties to the divorce are still liable to the other if the debts are not paid according to the decree. This means you could stop the creditor from coming after you on the debt, but your spouse could still go after you for not paying the debt in the form of an order to show cause.
To guard against this issue, it is best to have the debts divided up according to who is actually the “obligor” of the debt, if the debt is held individually. If the debt is held by both spouses, the issue becomes burdensome, and it is advisable for both spouses to file bankruptcy before filing for divorce. This eliminates the debts from the divorce discussion.
Bankruptcy attorney Matt Wadsworth has offices in Salt Lake City and Ogden.
