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Who gets stuck with joint consumer loans and credit card
debt when a couple gets divorced?
Maryland courts have limited ability to directly address credit cards,
car loans, and other consumer debt in the divorce context.
In 1989, the Court of Special Appeals (Maryland's intermediate
appellate court) pointed out that, at common law, a Maryland court
may not require one spouse to satisfy joint obligations of the
parties such as mortgages and taxes on real property, or pay the
interest on joint promissory notes.
Bankruptcy may or may not be a useful option for some parties.
Under 11 U.S.C. § 707(b), if a debtor earns in excess of the state
median income and is able to repay 25% of his or her "nonpriority
unsecured debt," the debtor will be ineligible for Chapter 7
protection and must proceed under Chapter 13. Effective March 15,
2009, the Maryland median family income was $55,543 for a single
wage-earner, $73,947 for a family of two, $84,952 for a family of
three, and $103,719 for a family of four.
In addition, the automatic stay provisions of 11 U.S.C. § 362 --
which keep some creditors from proceeding with collection efforts --
might temporarily or permanently interfere with certain aspects of
divorce proceedings.
Limitations on court-ordered remedies place a premium in these
situations on mediated, collaborated, or negotiated agreements
between parties.
NOTICE: None of the contents of this page constitutes legal advice.
To obtain legal advice, consult with an attorney. This is especially
important in divorce and family law matters, in which outcomes are
often peculiar to the particular facts and circumstances of the case.
debt when a couple gets divorced?
Maryland courts have limited ability to directly address credit cards,
car loans, and other consumer debt in the divorce context.
In 1989, the Court of Special Appeals (Maryland's intermediate
appellate court) pointed out that, at common law, a Maryland court
may not require one spouse to satisfy joint obligations of the
parties such as mortgages and taxes on real property, or pay the
interest on joint promissory notes.
Bankruptcy may or may not be a useful option for some parties.
Under 11 U.S.C. § 707(b), if a debtor earns in excess of the state
median income and is able to repay 25% of his or her "nonpriority
unsecured debt," the debtor will be ineligible for Chapter 7
protection and must proceed under Chapter 13. Effective March 15,
2009, the Maryland median family income was $55,543 for a single
wage-earner, $73,947 for a family of two, $84,952 for a family of
three, and $103,719 for a family of four.
In addition, the automatic stay provisions of 11 U.S.C. § 362 --
which keep some creditors from proceeding with collection efforts --
might temporarily or permanently interfere with certain aspects of
divorce proceedings.
Limitations on court-ordered remedies place a premium in these
situations on mediated, collaborated, or negotiated agreements
between parties.
NOTICE: None of the contents of this page constitutes legal advice.
To obtain legal advice, consult with an attorney. This is especially
important in divorce and family law matters, in which outcomes are
often peculiar to the particular facts and circumstances of the case.
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