What Happens to Joint Debt if Only One Spouse Files for Bankruptcy?

St. Louis, by Bankruptcy Attorney Tobias Licker, Esq.

Financial problems are one of the leading causes of marital breakdowns in America today. Divorce courts try to fairly apportion marital debt and assets between the two divorcing parties in the form of the property settlement. But what if one party then declares bankruptcy?

As a general rule, federal law supersedes state law. Thus the bankruptcy discharge will take precedence over the property settlement order. Even if you have a valid divorce court order stating that a debt is the responsibility of your ex-spouse, the creditor can still hold you responsible for the balance of a joint debt your ex-spouse discharged in bankruptcy. As a joint debtor you will be protected by the automatic stay through the co-debtor stay. Even though you did not file bankruptcy, creditors cannot continue with collection efforts as long as the stay is in place. The stay would end when your spouse or ex-spouse receives a discharge or the creditors obtains relieve from the automatic stay. Even though you are protected through the co-debtor stay, you do not share the benefits of the discharge order your spouse will receive at the end of the bankruptcy case. You will still be fully liable for the debt towards your creditors. This is true even though the divorce decree might make your spouse liable for the debt. The divorce decree affects only the parties in the divorce proceeding, this is you and your spouse or ex-spouse, third parties, such as your creditors are not bound to the divorce decree. As long as the provisions in the divorce decree are not in the nature of support they probably are dischargeable in either, chapter 7 and chapter 13. Your recourse will be to go back to state court and ask for a modification of the divorce decree.


A child support obligation cannot be discharged in a regular bankruptcy. In some jurisdictions, a substantial child support arrearage may be included in a Chapter 13 bankruptcy, but it’s best to consult a bankruptcy attorney to be sure. Some jurisdictions will suspend driver’s licenses and professional licenses, as well as imposing jail sentences when the arrearage reaches a certain level.


How can you avoid this potential problem? One way is for both parties to declare bankruptcy jointly when financial problems become severe. While the decision to declare bankruptcy is not an easy one, many people find that the fresh start would have eliminated a great deal of marital stress if done much earlier in the debt cycle. And if the primary threat to the marriage is debt, declaring bankruptcy may help to avoid breakup altogether. Especially since most couples realize that their economic status probably won’t be improved by divorce.


However, if divorce is inevitable, it’s important to protect your financial interests. Let your divorce attorney know the financial situation so he can determine the best course of action.

Even if your ex-spouse doesn’t declare bankruptcy on marital debt, that means your spouse intents to fulfill his obligation from the divorce decree or settlement, most creditors don’t care what the court-ordered property settlement says. In the creditor’s eyes, a joint bill is still owed by both parties, and the creditor may pursue legal avenues such as garnishment against either spouse. In other words, suppose the American ‘Turtle Credit Card bill was assigned to your ex in the property settlement. Despite the court order, if your ex isn’t paying the bill, the creditor can usually still pursue collection efforts against you. Some people, in an attempt to protect what’s left of their credit rating, choose to pay the bill, and then sue the ex for reimbursement of the divorce court order for documented payments made.


It is advisable to consult a qualified bankruptcy attorney for advice. If you are living in the St. Louis Metropolitan area, please contact your office, we have five locations throughout the area. Divorce can be devastating both emotionally and financially.

Bankruptcy can give a fresh start in more ways than one.

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