Behm Law Group, Bankruptcy Attorneys

Behm Law Group helps clients balance bankruptcy and divorce spousal debts.

According to Minnesota bankruptcy law, Chapter 7 bankruptcy differs from Chapter 13 bankruptcy in the handling of spousal debts during a divorce. Chapter 7 bankruptcy is for a liquidation of debt. Chapter 13 bankruptcy is for a reorganization of debt. Therefore, under Chapter 13, debts assigned to spouses in divorces are discharged. Under Chapter 7, that is usually not the case.

For Mankato residents, that means if a husband is ordered in a divorce decree to pay a $10,000.00 Discover Card debt that is in both spouses’ names with the other spouse being held harmless, the hold-harmless obligation to the other spouse cannot be discharged in a Chapter 7, but may be discharged in a Chapter 13. The bankruptcy attorneys at Behm Law Group, Ltd., state that if that same husband files for Chapter 7 bankruptcy, and Discover Card pursues the ex-wife to collect on the debt, and she pays something toward that Discover Card bill, then the husband is liable to the ex-wife for what she had to pay Discover Card. This is because the divorce decree held her harmless in that obligation. Had the husband filed for Chapter 13 bankruptcy, however, he could have gotten that obligation discharged as well.

Generally, debtors use Chapter 13 when they have enough equity in their secured assets to make this path worthwhile. These debtors must have a regular source of income and be able to make payments on any instituted Chapter 13 plan. The Chapter 7 option leads to a clean slate where heavy debt is eliminated, and none of it needs to be repaid.

This is just a snapshot of the decisions Mankato residents contemplating divorce need to make. The bankruptcy attorneys at Behm Law Group, Ltd., can help you navigate the bankruptcy laws affecting your situation. You see, bankruptcy is our specialty.

Divorces are difficult enough without adding confusion over how to handle debt. Make your transition to single life smoother by considering the options with Behm Law Group, Ltd. We can map out a plan together. Mankato, MN bankruptcy may not have been your initial goal, but if it becomes your reality, we have you covered.

The bankruptcy attorneys at Behm Law Group, Ltd. offer personal, practical bankruptcy advice in a non-threatening, compassionate manner. Call for a consultation today.