Most obligations incurred in connection with a divorce settlement cannot be discharged in a Chapter 7 bankruptcy. However, that is not always true in Chapter 13. If a spouse takes over a joint debt as part of an alimony or support obligation, the agreement to pay the debt cannot be discharged. However, if the debt was assumed as part of a simple division of property or debts, a successful Chapter 13 plan can erase the obligation to the lender, AND the obligation to the ex-spouse that was created by the divorce settlement documents.

If an objection to dischargeability of a debt incurred as part of a divorce settlement agreement is filed in a Chapter 13 case, the bankruptcy court will look at the language of the agreement, and the facts and circumstances surrounding the marriage and separation, to determine whether the agreement to assume the debt was in the nature of alimony and support. If so, the debt to the ex-spouse will not be discharged, and the ex-spouse will be free to enforce the agreement in the divorce court. If, however, the agreement is found to be a division of debts or property, the ex-spouse will be limited to filing a proof of claim in the Chapter 13 case and hoping to recoup some of his/her losses through disbursements by the Chapter 13 Trustee.

If you, or your credit standing, are being affected by an ex-spouse’s bankruptcy filing, it is important to seek advice from an Athens bankruptcy attorney right away. There are strict deadlines for filing objections.