Dear Bankruptcy Adviser,
I filed Chapter 7 and it was discharged June 25, 2009. Now one of the creditors is trying to collect from my ex-husband since he was the co-signer on this debt. Can the creditor do that after it's been discharged and can he try to sue me for the balance?
There are a couple of exceptions that make this topic somewhat difficult to cover without more information. But I can say that more likely than not, your ex-husband will be responsible for paying this debt.
Your bankruptcy wipes out your personal liability for all debts in your name. However, people who co-signed for you or are co-applicants with you cannot wipe out their liability in your bankruptcy. That would be too convenient for people to eliminate liability for their own legal obligations.
He agreed to be legally liable for this particular debt a long time ago and the creditor does not care who pays as long as someone does. Even if you were married and merely separated at the time you filed the bankruptcy, your now ex-husband did not file for bankruptcy or for bankruptcy protection.
Some clients have questioned this by saying, "But I used the card; he never made purchases on this particular credit card." That doesn't matter. As is the case with co-signers for automobile loans, mortgages and personal loans, the co-signer very rarely receives any benefit and only liability for his signature. I believe co-signing -- even for a spouse, parent or child -- is never a good idea. The co-signer gets very little benefit but gets equal legal exposure for his or her commitment.
That being said, your ex-husband should not be able to come after you for this debt. You filed bankruptcy and wiped out your liability. He should have been notified that you filed bankruptcy because he should have been listed as a "co-debtor" on this account in your bankruptcy paperwork. But failing to list and notify him of your filing does not change his legal liability for this debt. You received a discharge in bankruptcy of your debt; he did not.
There is one exception, and that is if you agreed to be liable for this particular debt when you got divorced. Many times, one spouse agrees to pay for some or all of the debt incurred during a marriage and before entering into the final divorce decree. In this case, your ex-husband could demand that you pay for some or all of this debt. He would have to enforce the divorce decree in family law court and require you contribute to pay for this account.
I understand you wanted your divorce to be the end of your connection -- legally, emotionally and physically -- to your husband. Unfortunately, many people commingle their accounts and liability when married and are unaware that liability can outlast a marriage. Sorry for the bad news. I hope you can resolve this issue without further involvement with your ex.
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