Filing for bankruptcy after a divorce may seem like an effective way of achieving a greater level of financial stability. However, there are many rules that you should be aware of before submitting your bankruptcy petition to a New Hampshire court. For instance, child support payments cannot be discharged, and the same is typically true of other debts associated with dissolving a marriage.
What’s the Bankruptcy Abuse Prevention and Consumer Protection Act?
The Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 made it harder to file for Chapter 7 bankruptcy. Furthermore, it also stipulates that you cannot use Chapter 7 bankruptcy to eliminate a debt that was included in a divorce decree. Therefore, you may be required to file for Chapter 13 protection, which requires you to pay at least a portion of an outstanding debt balance.
Bankruptcy may help you eliminate debts that your spouse won’t repay
Your divorce decree may state that your spouse is liable for paying off a credit card that was carried in your name during the marriage. However, if he or she fails to do so, the credit card company could come after you for payment. This is because that entity is not bound by the terms of your divorce decree. Instead, it is only bound by the terms that you agreed to when the account was opened.
In such a scenario, it may be possible to file for bankruptcy in an effort to have an outstanding balance eliminated before any adverse actions are taken against you. At a minimum, taking this step may give you the leverage needed to resolve the matter in a favorable manner.
If you are thinking about filing for bankruptcy after a divorce, it may be a good idea to talk to an attorney. He or she may provide more insight into whether you can use the bankruptcy code to discharge debts that were accumulated while married.