Will filing bankruptcy affect my line of credit with my ex?

October 28th, 2014 by Questions

I have just filed for bankruptcy two weeks ago, my ex wife has started to get phone calls because she too signed for the line of credit. There was a hold harmless agreement in the divorce decree and she is threatening to come after me for the monies. I discussed this with my trustee and he never mention that I would still be on the hook for this…I wouldn’t have filed. My question is, dose the bankruptcy absolve my responsibility to the line of credit, or will I still have to pay her?

Posted from: Ontario

Questions

One Response to “Will filing bankruptcy affect my line of credit with my ex?”


October 28, 2014 at 9:27 am, Doug Stuive, CA | Trustee | CIRP said:

I can only answer this according to what generally happens as we do not have access to your divorce decree or any court orders that were made through Family Court.
In general you are not responsible for this debt. When a person co-signs a debt they are equally liable to repay that debt as the primary borrower is to make those payments. When you declared bankruptcy you are no longer responsible for paying that line of credit as it forms part of the debt included in your bankruptcy estate. Your ex-wife is now responsible for paying the line of credit in full.
While you may have agreed through your divorce proceedings to take on the responsibility for paying the line of credit that does not mean that your wife’s obligation to that creditor has been removed. According to the creditor you are both legally responsible. If they can no longer collect from you because of the bankruptcy they are definitely entitled to try to collect from your ex-wife. Her credit rating will be affected if the line of credit is not maintained.
Whether or not she has the grounds to sue you for not following through with the divorce agreement to pay that line of credit is a legal matter that sits outside of the Bankruptcy Act. A trustee in bankruptcy cannot speak to the likelihood of success for this type of civil suit. You would need to seek a legal opinion from your lawyer.

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