Category Archives: Bankruptcy

Can marital debts from a divorce agreement be discharged (erased) in bankruptcy?

Maybe, maybe not?  Most Marital Settlement Agreements contain language that debts are not dischargeable (erasable or includable in bankruptcy). Bankruptcy law says that, too.  So that means you can’t get rid of marital debts in bankruptcy, right?  Not necessarily, even though the intent of most marital settlement agreements as well as the bankruptcy code is for the debt to be nondischargeable, the bankruptcy court can still take a look at the financial situations of the parties before making that determination.

So picture this scenario: in your settlement, you agree to pay your ex $25,000 cash and your ex agrees to pay off the $100,000 second mortgage.  Sounds like you made a good deal until your ex spends the $25k on a European vacation with his or new fling, then erases the second mortgage in Chapter 7.  Ouch.