It takes some time to recover emotionally after a divorce. It can take time to recover financially as well. Once the dust settles, you plan on devoting time to getting your money matters in order.
However, just as you start making headway with your finances, you find out that your former spouse declared bankruptcy. You just dug yourself out of your own post-divorce debt hole – what happens now? Take a look at some ways your ex's bankruptcy may affect you.
What kind of bankruptcy is it?
There are two primary types of personal bankruptcy proceedings: Chapter 7 and Chapter 13. A Chapter 7 bankruptcy discharge clears all debts, wiping the slate clean. You can expect the trustee to gather all assets and use them to pay debtors. A Chapter 13 bankruptcy involves entering into a payment plan that is acceptable to debtors. In this type of proceeding, you can usually keep your house and car so long as the equity is not above a certain threshold.
How does an ex's bankruptcy affect me?
How much you become affected by your ex's bankruptcy depends on what debts you held jointly. Even if the debts no longer belong to both of you, a debtor may come to you as a one-time account holder. This may cause you trouble and affect your credit. In Chapter 7, you may find yourself on the hook for more considerable sums of money since your ex is looking to discharge them all.
How do I get money back?
During your divorce, you more than likely split the debt just as you split any assets. While you may no longer have responsibility for the debt according to your divorce decree, that document does not carry weight to debtors. If you do end up having to pay a debt your former spouse had to pay per your order, you may be able to recoup any payments to a debtor by filing a civil lawsuit.