Divorce And Bankruptcy – Avoid Being Axed By Your Ex’s Debt

By Author: This article has been contributed by Karen Brown.
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“A true lover always feels in debt to the one he loves” - Ralph W. Sockman

If you are asked any two words that you would never like to hear, they would probably be “bankruptcy” and “divorce”. These two terms are somehow correlated and influence each other in matters of possessions and finance. Money is perhaps the most important stress factor for any relationship. Couples with monetary troubles would often think of divorce as the only solution to their problems. Each spouse is prone to think that the other person is mainly responsible for their financial tribulations. Whoever is to blame, you cannot divorce the debts acquired during your marriage, even though you divorce your other half. While divorce takes a toll on your physical and mental health, bankruptcy causes serious financial hindrance. If you could not save your marriage, try in any case to put your finances on track.

Following are a few tips to help you gain your financial freedom after the catastrophe of bankruptcy and divorce.

1. Allotment of property - The most complex matter after the ordeal of bankruptcy and divorce is division ...
... of individual property and marital property. Marital property includes all that is bought by the couple subsequent to their marriage. This marital property is used to pay off debts after the bankruptcy. Make certain that you have sufficient proofs for excluding your possessions from bankruptcy and your spouse should not property them to be marital ones.

2. Equal liability for debts - When a couple is married, they remain equally responsible for the debts gathered during their marriage. Even though the partners file for divorce, the debts incurred after that is the responsibility of both of them. However, sorting out of debts into joint debts and separate debts is an epic task. If you don’t file for bankruptcy and your partner does, you could be in an adverse situation due to the debt that both of you had accumulated during your marriage. Under such circumstances, it is better that you both file for mutual bankruptcy, so that none of you become solely accountable for your entire marital debt.

3. Inclusion of indemnity - It would be wise on your part to take in compensation into the divorce decree. It would prove very useful if your lender sues you for your other half’s post-divorce debt. If your spouse files for insolvency, this order could be used by the court to shield you.

4. Security lien - You could also present a particular property of your partner as security lien. This is a method to prevent economic loss for your spouse’s debt. The debt of your partner can be paid off by liquidation of this property. Request the court to consider this property as a support fee if your partner fails to pay in accordance to the orders of the court.