Divorce Decrees and Bankruptcy
In the preparation of a bankruptcy case, a decree of dissolution of marriage may disclose the following:
- Undisclosed debts and assets, obviously.
- Medical debts of a former spouse. In Oklahoma, a person is liable for all debts that his spouse incurs for necessities during the marriage, so all such debt needs to be listed on Schedule F.
- Orders directing the debtor to make non-support payments to a former spouse. In chapter 7 case, such obligations are not dischargeable. Indeed, in chapter 7, basically no obligations imposed by a divorce court are dischargeable. In chapter 13 case, non-support divorce-court obligations are dischargeable, and sometimes chapter 13 is selected for that reason. One workaround for this issue is to persuade the former spouse to file a bankruptcy case of his/her own.
- Orders directing the debtor to pay debts that are joint with a former spouse. In chapter 7, such obligations are not dischargeable. In chapter 13, they are dischargeable, and sometimes chapter 13 is selected for that reason. Even in chapter 7, it is not a problem if the debts are joint or if the debtor was ordered to pay them; the problem arises when both of those facts are present.