Dividing credit card debt in a divorce in Ohio can already feel quite overwhelming, but especially so if your ex-spouse later files for bankruptcy. When this happens, you will need to know whether or not this will impact your financial situation.
Are you worried about how a bankruptcy case will affect your divorce decree and debt liability? If so, check out this article, where we will discuss the elements of divorce and bankruptcy in Ohio that you will need to be aware of.
How Credit Card Debt Is Divided in Ohio Divorce
Firstly, before we discuss credit card debt in a divorce in Ohio, you need to understand how Ohio law addresses overall debt in a divorce. During divorce proceedings, debt is divided into two categories: marital debt and separate debt. Marital debt is debt that was accumulated during the marriage, while separate debt was usually accumulated before the marriage.
Ohio law also tries to keep things as equal as possible, often focusing on a 50/50 divide. However, this is not a rule for every divorce case as many factors will be taken into consideration, such as the length of the marriage, the standard of living, any children, each spouse’s income, etc.
When it comes specifically to credit card debt, how this is divided usually depends on whether it was accumulated before or after the marriage. Things can get a bit more difficult if some of the debt was accumulated both before and after the marriage. In this case, you will need to provide extensive documentation proving just how much of the debt was accumulated before the marriage, which would make it that spouse’s responsibility.
What Happens If One Spouse Files Bankruptcy Later?
Ohio law is relatively straightforward when addressing marital debt versus individual debt in divorce cases. However, things can get much more complicated if your ex later files for bankruptcy.
If either spouse filed for bankruptcy during divorce proceedings, the divorce case will have to be put on hold until the bankruptcy case has been addressed. But even if your ex files for bankruptcy after the divorce is finalized, that could still possibly affect you.
It is important to understand that a divorce decree is an agreement between you and your ex-spouse; it does not include lenders or creditors. So, if your name is still listed on legal or financial documents, this could put you in the position of being a co-signer or co-owner. In many cases, you will receive the same protections as your ex does when they file for bankruptcy, but you could also be put in a vulnerable position if creditors are allowed to pursue certain debts.
How Chapter 7 & Chapter 13 Deal With Debt After a Divorce
Every type of bankruptcy addresses marital debt discharge in Ohio a bit differently. For example, Chapter 13 bankruptcy has a repayment plan structure, allowing your ex to pay off their debt over a 3 to 5 year period. But if they fall behind on their Chapter 13 responsibilities, this could result in creditors coming after you if your name is on any documents.
The good news is that most Chapter 13 plans have a co-debtor stay clause, which protects any co-signers or co-owners. On the other hand, if your ex has debt remaining after they have completed their repayment plan, creditors may come after you to collect the rest of what is owed.
Filing for Chapter 7 after a divorce in Ohio can come with issues as well, even though it addresses debt very differently than Chapter 13. Chapter 7 bankruptcy can help discharge most types of debts, but only for the person filing for bankruptcy. This means that you may be on the hook for paying off that debt if you are in any way connected to it.
You have to remember that creditors don’t necessarily care about who pays the debt; they just want it paid. That is why it is essential that you hire a bankruptcy and divorce attorney in Ohio. An attorney can help protect you from creditors, ensuring your divorce decree remains in place, and you aren’t held responsible for your ex’s debt.
How to Protect Your Finances
Once you are divorced, you cannot control what your ex chooses to do with their finances. However, you can think ahead and be proactive, protecting your finances in case they decide to later file for bankruptcy.
Here are some examples of steps you can take to protect yourself from being held liable for your ex’s debts:
- Pay off joint credit card accounts.
- Sell any jointly held property.
- Work with creditors one-on-one to manage joint debts.
- Refinance joint debts in one person’s name.
A divorce and bankruptcy attorney in Ohio can help you better examine your situation to determine the best course of action.
FAQ Section
Am I still responsible if my ex files for bankruptcy?
Possibly. If you are in any way connected to your ex’s debt, creditors have the right to try to collect the debt in full from the non-filing spouse.
Can bankruptcy override a divorce decree?
It can eliminate certain elements of a divorce decree, such as personal liability for certain debts. However, this does not extend to court-ordered obligations like child support, alimony, or a court-ordered requirement that your ex pay your divorce fees.
Should we file for bankruptcy before the divorce?
This is dependent on a case-by-case basis and the relationship itself. Generally, filing for bankruptcy before divorcing is more straightforward, especially if many debts are jointly owned. A bankruptcy and divorce attorney in Ohio can help you determine whether or not this is the right option.
Hire a Divorce Attorney in Ohio
Navigating marital debt discharge in Ohio can be especially difficult if your ex-spouse files for bankruptcy later on, which is why it’s always recommended to have legal representation. Richard P. Arthur, Attorney at Law, has extensive experience handling both bankruptcy and divorce cases in Ohio, helping to address your concerns in both areas. To proceed with your case, contact us today at 937-254-3738 for a free consultation.