Ex-husband is filing BK (Spousal debt question)

[2know]

I just received word that my ex-husband will be filing BK and I have some query on its effects on me.

Background: We got married in Michigan (non-community property state) in April 2006 and stayed married until July 2010. In the last 4 months of our marriage, I relocated to Nevada (community property state) and filed for divorce. The divorce was granted in Nevada in August 31, 2010.

Question: Would my relocation and filing for divorce in Nevada which is a community property state, make me liable for my ex-husband's debts? All his debts are personal and his own. All of it he applied for on his own as a resident of Michigan. None of those debts were marital debts. I did not co-sign or apply together with him on any loan/credit/debt. I am terrified because last I heard, he owes about 65k. I am just starting my life and cannot afford to be liable for debts I did not incur.

Thank you very much for any info you are able to share.

[LadyInTheRed]

As I just posted in the other thread where you asked the same question:

I am pretty sure that whether debt is community property debt depends on the law of the state you lived in when the debt was incurred. Moving to another state shouldn't suddenly make somebody liable for existing debt he was not previously liable for.

[DesdemonaB]

Hi
I'm in MI - and went thru a divorce prior to filing 5/09 - we had no joint debt but my debt alone as well losing that addition income is what caused me to file. Sole financial support of two kids.

Here's what I find for the state of Michigan:

Alimony, maintenance, and/or support are protected from discharge. Divorce decrees and separation agreements are covered by 11 U.S.C. Section 523(a)(15). This section states that these debts are not dischargeable unless:

(A) the debtor does not have the ability to pay such debt from income or property of the debtor not reasonably necessary to be expended for the maintenance or support of the debtor or a dependent of the debtor and, if the debtor is engaged in a business, for the payment of expenditures necessary for the continuation, preservation, and operation of such business; or
(B) discharging such debt would result in a benefit to the debtor that outweighs the detrimental consequences to a spouse, former spouse, or child of the debtor.

Here's what I could find on Nevada:

Personal liability
Starting point in the analysis is to understand just who is "personally liable" for the debt in question.

Debts generally arise either by

contract (created by the agreement of the debtor and the creditor)

tort (arising by law from the negligent or intentional harmful act of the debtor); or by

statute (arising by operation of law, like taxes, or by court order, like family support).

If you are personally liable for a debt, the creditor can resort to property you own or your earnings to satisfy the debt. In addition to the personal liability of a married person in a community property state, the community property is liable for the debts of either spouse incurred during the marriage.

Community property generally includes real estate, tangible assets, and earnings of both spouses acquired during the marriage;

Community property does not include assets acquired by either spouse by gift or inheritance or assets owned before marriage.

Who is liable after divorce
When at divorce, the community property is divided between the spouses and becomes their separate property, there is no longer any community property for creditors of the marriage to look to. The liability question is then: is this individual, the former member of a marital community, personally liable for the debt in question?

In general, you are liable if you incurred the debt (bought goods on your credit card; signed the loan; incurred the debt in operation of your business; signed the tax return from which the tax liability arises, or caused the accident that injured someone.)

You are not usually personally liable for debts on your spouse's credit card (unless you signed the application, too); for your spouse's tort debts; or for your spouse's taxes if you did not file jointly.

Note that the family court can create personal liability for either spouse for a debt in the course of dividing the debts upon divorce.

Marital debts after a bankruptcy
The bankruptcy discharge affects the personal liability only of the debtor in the case.

When one spouse gets a discharge, the creditor can collect the debt from the non filing spouse, if that spouse is personally liable for the debt. If the spouses are still married, the creditor cannot, however, collect the debt from community property acquired after the bankruptcy was filed.

Note, too, that any provisions in agreements or court orders made in connection with the divorce requiring one spouse to indemnify (reimburse) the other spouse if third party creditors collect from the other spouse, is a debt that is potentially dischargeable in bankruptcy, too.

In a Chapter 7 case, the spouse benefitted by such an order can bring a non dischargeability action to except that obligation from the discharge under 11 U.S.C. 523 (a)15.

Good luck