Bankruptcy after divorce can undo a lot of what your divorce did, especially regarding who pays what (that is, the allocation of debt).
Under the 2005 amendments to the federal bankruptcy code (Bankruptcy Abuse Prevention and Consumer Protection Act or "BAPCPA"), if your spouse kept the house and is paying you for your share of the house equity over time... you are at risk.
That is because under Chapter 13 reorganization (the easier form of personal bankruptcy to qualify for), home equity debts - technically non-support domestic obligations - ARE dischargeable.
Discharge in bankruptcy "wipes the slate clean," meaning the debtor (e.g. your EX) is no longer required to pay the discharged debt. Danger: the bankruptcy judge could wipe out your equity if your EX files for personal bankruptcy under Chapter 13!
To make matters... more confusing, the same house equity debt is NOT dischargeable under Chapter 7 liquidation (the more difficult form of personal bankruptcy to qualify for).
For more details on the intersection of bankruptcy and divorce, check out Cynthia M. Fox's blog, "The Fox Family Files." http://tinyurl.com/9gwrqq
As always, a family lawyer licensed in your jurisdiction can advise you on your best options during the divorce process for a stronger financial future after your divorce.
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