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Will my ex's bankruptcy affect me?

Financial problems are common contributing factors in a divorce. If a couple is already struggling financially before a breakup, bankruptcy might seem like the best option before, during or immediately following a divorce.

What happens to you if your ex-spouse files for bankruptcy under Chapter 7 or Chapter 13? Your financial wellbeing doesn't have to adjust to your ex's new circumstances, so it's worth knowing what to watch out for if they need to file following a divorce.

Credit scores and obligations

One issue to consider is the effect of your ex's bankruptcy on your credit. For jointly-held credit obligations, you will still be responsible for the debt even if the bankruptcy discharges your former spouse from repayment obligation. Be aware of what debt you divide in a divorce so you don't end up taking on more than you originally agreed to.

In terms of your credit score, an ex's bankruptcy should have little to no effect. Scores are individual even with joint or cosigned debt obligations. The risk to your score could increase if you are held responsible for more debt than originally decided and you struggle to make payments.

Credit reporting agencies could mistakenly mark your report after the bankruptcy if they don't realize you've divorced your former spouse. It's in your best interest to monitor your reports for a few months following their filing to ensure the bankruptcy doesn't mistakenly reflect on your own score.

Support requirements are not dischargeable

An important point to note is that child and spousal support obligations are not subject to discharge under the federal bankruptcy code. The Bankruptcy Abuse Prevention and Consumer Protection Act (BAPCPA) passed in 2005 exempts domestic support obligations from discharge under Chapter 7, Chapter 13 and individual Chapter 11 filings.

A domestic support obligation includes payments recoverable for spousal and child support. Declaring bankruptcy will not get a debtor out of making these payments. Additionally, the automatic stay imposed through a bankruptcy filing will not apply to domestic support proceedings the way it does to other court proceedings.

An ex's financial situation does not have to impact yours after a divorce. The impact on you isn't automatic, but it's worth knowing how the process could affect you. There are options for protecting your financial wellbeing from an ex's bankruptcy filing.

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