Chapter 13 Bankruptcy is a good option when a divorce decree / order requires you to repay debt

In 2005 the bankruptcy laws changed to require a person to file a Chapter 13 Bankruptcy to eliminate debt “to a spouse, former spouse, or child of the debtor…that is incurred by the debtor in the course of a divorce or separation or in connection with a separation agreement, divorce decree or other order of a court of record”.

Essentially this means that a chapter 13 must be filed to eliminate your responsibility to repay a debt that a divorce decree says that you are responsible for (or 1/2 of). This is because the obligation to repay these debts is owed to your ex-spouse, who will now owe the creditors. If you only file a Chapter 7 Bankruptcy then your ex-spouse retains the right to sue you by bringing an Order to Show Cause for failure to comply with the order of the divorce court, and you may be held in contempt of court.

For example, if you assumed the responsibility to pay for a cosigned home or car in a divorce, but just can’t afford it now, you will probably need to file a Chapter 13 bankruptcy to eliminate your responsibility to repay that debt. This can get tricky, so you should speak with an experienced bankruptcy attorney to see what is necessary in your situation.

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