What Will Happen to My Ex-Spouse’s Credit Report if I File for Bankruptcy?
Each person should have a personal credit file for reporting purposes. Your individual debts are not supposed to appear in your ex-spouse’s credit file. Similarly, your bankruptcy shouldn’t be a part of your ex-spouse’s file if you have no joint debts.
It definitely pays to monitor your credit file, since credit reporting doesn’t always follow a strict law.
It is always advisable to insert clauses into a property settlement agreement or a divorce judgment to limit the impact of a bankruptcy.
What Can I Do to Protect Myself if My Spouse Files for Bankruptcy?
One inherent truth about life is that it often is not fair. In an early Bohm Wildish & Matsen case, the parties agreed to equally split $40,000 worth of credit card bills. The wife did not want to ruin her credit and was unfortunately forced to repay all of that debt. Her husband did not pay a dime to these credit card debts, even though the divorce judgment required him to pay half.
It is always advisable to insert clauses into a property settlement agreement or a divorce judgment to limit the impact of a bankruptcy.
My Husband Filed for Bankruptcy and He Wiped Out All of His Credit Card Debts. The Credit Card Companies Are Now Suing Me. What Can I Do?
Under California family law, the courts have continuing jurisdiction to review alimony and child support rulings. They may increase or decrease such awards if ex-spousal circumstances change, and a post-divorce bankruptcy filing falls under the category warranting award modification. The non-debtor spouse is most likely to make a Lepis application. A non-debtor wife can file a motion with the family court requesting the alimony, child support, and terms of the divorce settlement be reconsidered because of the bankruptcy.
If One Spouse Files for Bankruptcy, What Happens to Any Joint Credit Card Debts?
The majority of divorce cases put credit card distribution at the top of the issue list. It’s recommended that all credit card debts are paid off from the marital assets before anything else is distributed. Paying off marital debt and tying up as many loose ends as possible before the divorce reaches the court makes the process much easier for everyone involved.
If the marital home is sold, credit cards should be paid off at the closing. The closing attorney can send out checks to the credit card companies immediately, and many creditors will accept a 60% debt settlement if it is paid in one lump sum. However, before any credit card debt is settled, you must always get a settlement letter from the credit card company or collection agency verifying the terms of the settlement. Credit card companies and collection agencies can breach the line, as their main goal is to collect as much money as possible. Your credit, home, and paycheck are not their concern, and they’ll do whatever it takes to achieve their goals.
In any divorce case, the distribution of credit card debts must be handled with an extreme attention to detail. One should never assume their spouse will pay the credit card debts assigned during the divorce proceedings. Any property settlement agreement derived from the divorce should address the apportionment of credit card debts if one spouse filed for bankruptcy. There have been countless cases where one spouse files for bankruptcy and tries to saddle the debt onto their ex. Informed divorcing men and women can hedge their risks and minimize these potential disasters if they take the necessary steps and listen to their divorce attorney.