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Divorce Decree Debts


Most spouses have debts to divide when the marriage ends in divorce. The divorce decree will usually allocate the payment responsibility between the spouses. The decree will typically award the house to one spouse and specify who is responsible to pay the mortgage. The decree will also divide the payment responsibility for the credit card debts or medical bills. It is very common for one spouse to seek bankruptcy protection in an attempt to discharge the debts he was ordered to pay in a divorce decree. The entry of a bankruptcy discharge can have the effect of reversing the debt payment obligations in the divorce decree.      Index

1. Non-Binding Effect of Divorce Decree on Creditors. A divorce decree is merely a contract between the spouses which is enforceable by the family court. The division of debt made in a divorce decree is not binding on creditors. If one spouse fails to pay a debt as ordered in a divorce decree and the other spouse was liable on the debt prior to divorce, the creditor is legally entitled to collect from the other spouse.       Index

2. General Rule Re: Discharge of Divorce Decree Debts.

2.1. Chapter 7 Cases. Debts owed to a former spouse or child and incurred in connection with a prior divorce or separation case in state court are not dischargeable in a Chapter 7 or 11 case. 11 U.S.C. § 523(a)(15).  The 2005 bankruptcy reform legislation eliminated all prior exceptions to this rule.       Index

2.2. Chapter 13 Cases. In Chapter 13 cases, debts owed to a former spouse or child in connection with a prior divorce case can be discharged. 11 U.S.C. § 1328(a). Divorce decree debts can be discharged if all plan payments are completed.       Index

3. Bar to Discharge Is Automatic. The non-bankrupt ex-spouse or child does not need to file a discharge contest (a lawsuit) against the bankrupt spouse or parent to prevent the divorce decree debts from being discharged. The bar to discharge is automatic. The non-bankrupt ex-spouse or child does not need to raise the issue while the bankruptcy case is pending. The non-bankrupt ex-spouse or child can enforce the divorce decree obligations in state court at any time after the bankruptcy case has been concluded.       Index