When Your Ex Files For Bankruptcy
When you sign a loan or other debt as a co-signer, you may not think much of it, especially if you are married at the time. But, if that relationship goes south and you end up getting divorced, that debt may get assigned to you
If you both own interest in a piece of property or a large asset, either the asset will be divided and one side will be ordered to pay the other spouse for it, or the asset will be sold and the profits split. If one spouse pays the other for their interest in the property or asset, you may think that’s the end of it. But, if you cosigned and your ex-spouse fails to pay or files bankruptcy, you could be held liable for the property or asset.
You are being held liable for this debt because you cosigned on the loan. When you cosign on a debt, you are promising you will make good on the debt in the event that the other party is unable to pay. So, once your partner, ex- or not, fails to pay by declaring bankruptcy, the creditor views you as their last hope for payment on that debt.
If you cannot keep up with payments on this new debt and you cannot work out an agreement with your ex-spouse in family court, your only recourse may be also to file bankruptcy. If you are being held liable for debt your ex-spouse was assigned to pay, you’ll have to decide whether a court fight is worth the time and money and whether you have the funds to fight for your credit score.