What Divorce Related Debts Can Be Discharged?

Posted by Kevin Ryan | Oct 22, 2017 | 0 Comments

One of the most difficult issues to settle in a divorce case is the debt incurred by one or both spouses.  In some cases the debt itself is the main reason the parties are in the divorce case.   

In the context of a bankruptcy case, joint marital debts that one spouse agreed to pay for the other can be discharged as against the lender or creditor.  At the same time, however, the ex-spouse does not lose the right to have the bankruptcy spouse pay his or her joint liability for the debt if that is what is provided in the divorce decree.  

A divorce decree in this context will usually contains language that one spouse will “indemnify” ( or, hold harmless or innocent) the other party to a joint debt.   Since a joint debtor is not discharged by the filing of a solo bankruptcy by the other debtor, the liability of the joint debtor remains fully actionable by the creditor post-discharge.  The issue of post bankruptcy liability for divorce related debt can be avoided by including language in the divorce decree providing that each party pays his or her own debt.  

When a party subsequently files a solo bankruptcy case, the co-debtor will be responsible for his or her own liability for the joint debt, while the debtor who filed the solo bankruptcy case receives a discharge against the creditor.   The creditor in this situation can only collect against the spouse who is jointly liable, and who did not receive a bankruptcy discharge on the debt.  

Spousal and child support orders cannot be discharged in bankruptcy cases.   A party who is behind on child support or spousal support ( “alimony”)  file a Chapter 13 case so that arrears can be paid over a time period of  between three and five years.   The child support or alimony arrears can be paid over time as part of the reorganization that is the central part of a Chapter 13 bankruptcy filing.    This cannot be done under Chapter 7 since Chapter 7 is a liquidation bankruptcy.  

A debtor can discharge an obligation to transfer property to an ex spouse under  divorce decree.  The critical issue is whether the order to transfer the property is in the nature of a division of property ( which can be discharged) or in the nature of spousal support ( which cannot be discharged).   One thing to look for when analyzing this type of obligation is whether the transfer of property ( or payment of a lump sum of money to the spouse)  was ordered in place of ( in lieu of)  an order for monthly alimony.   

About the Author

Kevin Ryan

"I'll never be the kind of attorney your creditors want me to be. I'll always be the kind of attorney you NEED me to be. Call me. I'll BE there for you. And I'll make them go away."  -Kevin Ryan, Attorney at Law Kevin Ryan is a graduate of the College of Wooster and the Cleveland Marshall College of Law. He is admitted to practice before all Alabama State Courts, the United States District Court for the Southern District of Alabama, and the United States Bankruptcy Court for the Southern District of Alabama. The United States Bankruptcy Court is a part of the United States District Court. Since 1998, Mr. Ryan has represented thousands of individual clients in bankruptcy, criminal, divorce, probate, personal injury, and real estate matters.  Attorney Ryan is also a licensed real estate agent in Alabama.  He handles  Bank-owned properties, short sales, and conventional sales in addition to conventional real estate listings.   This wide range of experience enables Attorney Ryan to take a wider look at your legal matter. It is important to consult with an attorney who can see from experience how other legal issues may affect your situation, and advise you accordingly. Personal Info Kevin Ryan is a member of First Baptist Church in Silverhill, Alabama. He resides in Silverhill with his wife Jessica and their three children. Committed to helping our Clients achieve a fresh financial start Our practice focuses primarily on consumer bankruptcy matters under Chapter 7 and Chapter 13 of the United States Bankruptcy Code.  Our law practice also includes matters where bankruptcy litigation, appellate work, or involvement in civil lawsuits is needed by a client.     No representation is made that the quality of any of these legal services is of higher quality than another attorney or law firm.   The United States Bankruptcy Code requires the following notice:  We are a Debt Relief Agency, which means we help people get legal relief from their Debts through the bankruptcy process. Interested in learning more about our bankruptcy attorney near Mobile, Alabama? Contact Us for help with chapter 7 bankruptcy or chapter 13 bankruptcy in Mobile, Baldwin and Washington counties. Education Juris Doctor, Cleveland Marshall College of Law, 1997 Employed full time as a paralegal while attending law school in the evenings. B.A., The College of Wooster, 1994 NCAA Div.III All Conference (N.C.A.C.) Football Team : Defense 1993; Most Inspirational Senior Award 1993; Co-captain 1993; Letterman 1991-1993; Phi Sigma Alapha Fraternity 1991-1994; Athletic Director Jurisdictions Admitted to Practice Alabama


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I'll BE there for you.

I'll never be the kind of attorney your creditors want me to be. I'll always be the kind of attorney you NEED me to be. Call me. I'll BE there for you. - Kevin Ryan, Attorney at Law