When Joint Debt Complicates Things in a Divorce and Bankruptcy

Everyone understands this: bankruptcy is a way to eliminate debt. What happens, though, when you file for divorce? Is your former spouse’s debt your debt as well? This is an especially a great question to ask if your former spouse doesn’t file for bankruptcy as well. What happens when you both incurred the debt during your marriage and have basically shared the debt?

Let’s say, for instance, you file for bankruptcy. There’s a specific creditor both you and your former spouse have shared, and by filing for bankruptcy on your financial end of things, you’ve liquidated your side of the debt under Chapter 7. That’s fine. However, unless your former spouse files for bankruptcy as well, that former spouse will still be responsible for his or her side of the debt! This is especially difficult in divorce when the joint debt isn’t, in fact, shared debt.

The obvious solution is to discuss it with your ex. Perhaps he or she would like to know that you’d be filing for bankruptcy soon, which would then throw all of that joint debt on his or her head.

It’s important to note that there are two options before even considering bankruptcy during a divorce:

• You either ensure that the joint debt is reconfigured to be only in one name (most likely the name of the person filing for the bankruptcy), or
• The other former spouse also files for bankruptcy.

Either way, it settles the issue successfully. The last thing you want to do is muddy the waters even more than it already is with a bankruptcy and divorce.

If you have questions about divorce in New Jersey, please do not hesitate to contact Moskowitz Law Group, LLC. With decades of combined experience and extensive resources, we have what it takes to handle even the most challenging case. Fill out our online contact form now to request a review.