Bankruptcy expert Leon Bayer answers real-life questions.
I am wondering if I should file for bankruptcy. I just got served with a lawsuit for an old credit card debt that my ex and I incurred when we were married. According to our divorce agreement, my ex is supposed to pay these debts. But he hasn’t paid up. Why don’t the banks leave me alone and go after him? If I file bankruptcy, does that get my ex off the hook?
I think you are on the right track – it’s time for you to visit a bankruptcy lawyer who can fully explore your debt issues. A good lawyer can answer your questions, determine if you are eligible to file, and let you know how you can bring this all to an end. Most bankruptcy lawyers don’t charge for a consultation. (Learn about how to find a bankruptcy lawyer.)
You Still Have Legal Rights Against Your Ex Spouse
When a divorce agreement assigns debts to your ex spouse for payment, and he fails to pay them (which means he has failed to perform under the divorce agreement), you have legal rights to assert against him. For example, you might ask the family court to hold him in contempt of court because he has failed to comply with the divorce agreement. You may have already considered this and decided not to follow this path – perhaps because it is costly and time consuming. Or maybe it would be futile if your ex’s financial situation is no better than yours.
What Can You Do If Your Ex Spouse Files Bankruptcy and You Don’t?
Incidentally, suppose he files bankruptcy and you don’t? You may be glad to know that if he files Chapter 7 bankruptcy, it won’t erase your legal rights to enforce the divorce agreement. You can still seek to recover reimbursement from him for debts covered by the agreement that you were forced to pay because of his failure to abide by the agreement. (These debts could be discharged in Chapter 13, however.)
Why Won’t the Banks Go After Your Ex and Leave You Alone?
The divorce agreement was made solely between you and your ex. The creditors were not part of the deal. They previously had the legal right to go after each person who was legally obligated on the debt. Your divorce agreement has not changed that. If both of you were obligated under the contract, the creditors still have the legal right to collect from each of you.
If you file bankruptcy, you can most likely discharge your obligation to pay the debt, but it does not eliminate your ex spouse’s liability. Once your liability for the debt is gone, perhaps the creditors will go after your ex more aggressively.
You Must List Your Rights Against Your Ex Spouse in Your Bankruptcy Case
If you file bankruptcy, your right to seek reimbursement from your ex spouse should be listed as a possible asset, even if you know that enforcement of the agreement would be futile. It is possible that the bankruptcy trustee in your case would sue your ex on behalf of your bankruptcy estate to make him pay what he owed you under the divorce agreement. (As a practical matter it rarely happens because usually the ex spouse is just as broke as the debtor. But if your ex has money, it could happen.) The right to make that decision belongs to the trustee in your case. The trustee can’t exercise the right to make a decision if the trustee doesn’t know about it. And there can be severe penalties against you for failure to correctly list all assets, even when assets have no apparent value. So be sure you list it.
Leon Bayer is a Los Angeles bankruptcy attorney. He is a partner at Bayer, Wishman & Leotta, a California law firm specializing in bankruptcy. The opinions and advice in this blog post are from Mr. Bayer alone, and should not be attributed to Nolo. By answering a question on this blog, Mr. Bayer does not become your lawyer.