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Does My Debt Pass to My Former Spouse in a Chapter 7 Bankruptcy Discharge in Los Angeles?

During divorce, filing bankruptcy can add significant complexity to the discharge based on the terms of the settlement agreement and the details of any outstanding debt. Divorcing couples in Los Angeles must deal with California community property requirements along with bankruptcy rules pertaining to non-dischargeable debt. Therefore, they need legal support from an attorney who has specific experience in this specialized area of bankruptcy law.

Every set of circumstances is unique. However, just one example can illustrate the vital need for an experienced bankruptcy and divorce attorney in Los Angeles. Assume your spouse agreed to jointly take on an unsecured loan applying to property you obtained as part of the divorce settlement. Chances are the settlement stipulated your ultimate responsibility for the loan. When you file for Chapter 7 bankruptcy after the divorce, the holder of the loan can go after your former spouse for payment. However, you still owe that money to him/her even after your bankruptcy discharge is complete.

Certain types of debt cannot be discharged in bankruptcy. According to Subsection 523 of the U. S. Code, any debt owed to the spouse, former, spouse or child of a debtor in accordance with a court order generally represents non-dischargeable debt. Therefore, while your loan may pass to your former spouse over the short term, you retain ultimate responsibility based on the stipulations of your divorce decree.

You need to seek experienced legal support before you file for divorce or bankruptcy to understand the potential consequences of your decisions. The Law Offices of Michael Jay Berger has the skills and experience needed to develop a cohesive plan that helps you obtain the most beneficial financial outcome.

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