Discharging Marital Debt in Bankruptcy

Some couples should have said “Until debt do us part” when they repeated their marriage vows. Expecting to have it all, some spent too much, got into debt, and the result can be a painful divorce. Often, the trouble doesn’t end at the divorce. Ending a marriage can be as expensive as getting married in the first place, adding on to the existing debt with legal fees, court fees, and debts that can be created in divorce or settlement agreements.

Mistakenly considered to be a sign of financial failure, bankruptcy can be used to restore peace in a stressful situation, making your life better in the long run. When debt is an overwhelming issue in your life, bankruptcy can be of help rather than a hindrance.

There are two types of bankruptcy available to consumers: Chapter 7 and Chapter 13. To learn more about Chapter 7 versus Chapter 13 bankruptcy filings, read this bankruptcy blog by Merritt Webb Attorney Joey Wilson here.

Debt that was incurred during the marriage by either or both spouses can be discharged by a Chapter 7 filing.  Debt created by a domestic support obligation (like alimony payments or child support payments) or settlement agreements cannot be discharged. Domestic support obligation discharges are better handled under a Chapter 13 filing.

A Chapter 13 filing is essentially a payment program to help settle your debt. A proposed plan to repay your secured debt (like mortgage or car loans) and priority debt (like student loans or alimony payments) and some or all of your unsecured debt (like credit card loans and medical bills) is submitted to the court and reviewed for confirmation by a trustee assigned to your case.  Once your payment plan is completed in full, any remaining unsecured debts are discharged leaving you with no legal obligation to repay additional amounts owed to the creditor unless you choose to continue to satisfy it.

If you are considering filing for bankruptcy for any reason, contact an experienced bankruptcy attorney for more information. Consultations are often free.

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