Q: Can my ex-husband's creditors come after the equity in my new home if he files Chapter 7 and there is joint debt?
My ex husband is responsible for half of the debt incurred during our marriage, however he is now threatening to file for Chapter 7. He has the ability to move the joint debt to a credit card in his name only, but is refusing. I am in the process of buying a new home and selling the home we held jointly in marriage. Can the creditors of the joint accounts come after the equity in my new home if he files bankruptcy?
A:
It sounds like there are two separate issues in play here. First, one spouse being ordered to pay joint debt in a divorce case generally does not relieve the other spouse of the obligation to pay that debt--the divorce court has no power to alter the terms of the contract with the original creditor. So, a creditor is typically free to pursue either spouse for payment of the debt.
When one spouse is compelled to pay debt that was assigned to the other in the divorce court, the paying spouse's remedy is against the non-paying spouse.
Second is the issue of the bankruptcy. Depending upon the classification of the debt and the terms of the property settlement or court order, a debt to a former spouse created in the course of a divorce may not be dischargeable. Your first logical step would be to consult your divorce lawyer regarding the terms of the property settlement and the likelihood that the debt could be discharged.
*Kevin Chern is Managing Partner of UpRight Law, a national law firm with licensed attorneys providing bankruptcy and consumer legal services in all 50 states. He is an Illinois licensed attorney with 21 years of federal consumer bankruptcy and consumer protection law experience. This response is for informational purposes only and is not intended to be legal advice. For legal advice, consult an attorney licensed in your state with the appropriate expertise.
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