Q: Can an X-Spouse discharge a debt in Ch. 7 if the Divorce Decree states a specific debt can not be discharged in Bkrptcy?
URGENT: I’m in divorce final mediation... The respondent has made an offer to settle equity in property & has agreed to not include a specific debt in a Ch. 7 bankruptcy that he plans to file. Is it bankruptcy fraud if he agreed in final divorce decree to not discharge one specific debt listed in the signed divorce decree? Can he still discharge his liability from the the debt despite the agreement made in the divorce? The debt does not fall under any exemptions that I can see.
A: This is a mixture of State and Federal law. Bankruptcy law states you must list all debt in your name and a creditor doesn't care who it got assigned to in a divorce decree; all they care about is who took out the obligation to pay the debt in the first place - that is who they will seek to hold accountable. Generally, the only recourse for the other person is to sue on a breach of contract or other remedy depending upon the original agreement.
I would suggest you go over this very carefully with your divorce lawyer and perhaps seek consult with a bankruptcy attorney even though you don't intend to file for bankruptcy.
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