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What happens when we divorce in a community property state and I file for bankruptcy in a non-community property state?

Flagstaff, AZ |

My wife wants to file for divorce in Arizona and I am looking into moving to Michigan. The credit card debt is in my name, it was incurred durring the marriage, more of the debt was for her benefit, and the debt total is $88,000. If the divorce is filed in Arizona, can I take responsibility for the credit card debt even though my income can't repay half of the debt and hers could pay half of it? I would file for Chapter 7 bankruptcy in Michigan after being a resident for six months for the total amount of $88,000. Would the Arizona divorce court allow me to take the whole $88,000 of debt? Would the Michigan bankruptcy court allow me to file Chapter 7 for the $88,000 of debt when the divorce was in a community property state?

Attorney Answers 3

  1. Best answer

    Liability for debt is typically by contract. If the debt is in one person's name, the creditor will only come after that person, according to the terms of the contract. The only time community property comes into play on a debt is if it was made for a necessity, such as a medical bill.

    If a divorce court orders you to pay part of the credit card debt made during a marriage, the creditors do not care about that court order. They only care about their contract rights. Your ex may pursue you in your bankruptcy case to ask that you be obligated to continue to pay any debts ordered in the divorce, but it is a crap shoot as to what the judge might do if she files an adversary complain in your bankruptcy.

    Hope this perspective helps!

  2. I can only answer part of your question. You would file for bankruptcy where you have lived for the majority of the six months prior to filing (91 days). The treatment of the debt depends on a number of factors, most importantly where the divorce is filed. The divorce would be filed where either of you lives (though there would be issues of jurisdiction over property at that point) or where you both lived while married.

    If you file for bankruptcy and a court awarded your ex-spouse money for the debt (meaning that you were made responsible for it), your responsibility to your spouse would survive a Chapter 7 case. It would only survive a Chapter 13 case if the court made the award as part of a support order.

    I hope this helps. Now sit down with an attorney and good luck.

    Mr. Goldstein is a Virginia-licensed attorney only. The information is not, nor is it intended to be, legal advice. You should consult an attorney for individual advice regarding your own situation. Answering this question does not in any way constitute legal representation. Contacting Mitchell Goldstein or the Goldstein Law Group does not constitute legal representation, nor is any information you provide protected by attorney-client privilege until otherwise advised.

  3. The divorce laws in arizona state that debts should be divided fairly and equitably. What does that mean? Well almost any division is considered if both parties agree to it so you can enter into a consent decree with her in the divorce proceedings and divide the debts any way you wish. Keep in mind that the consent decree does not modify the contact between your spouse and the creditors. These creditors can still pursue her after the divorce. After the divorce you are free to file bankruptcy if you wish but it's seems like your spouse will need to file too. The more common path would be to file a joint bankruptcy first then get divorced.

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