When money problems arise, relationships can soar. If you have been through a divorce or are headed for one, you may have to deal with a hold harmless agreement that says who is responsible for which debts after the divorce. In bankruptcy, this is something that you have to deal with since those debts are generally not exempt from bankruptcy proceedings. Fortunately, there are ways that a Saint Cloud attorney can assist with hold-harmless agreements in bankruptcy.
When a couple gets divorced, all assets and liabilities are split between them. That means that although you may be awarded the house while your spouse gets the car, you must also determine who is responsible for the mortgage and the car payment. Depending on how assets are split, debts can be divided along the same lines (i.e., you get the house and become responsible for mortgage payments). However, other debts can be assigned as well to balance the divorce.
Usually, when an asset is given to one party in the divorce, its debt also becomes theirs. To ensure the other party is no longer responsible for that debt, lawyers create a hold harmless agreement that assigns the debt to one person and indemnifies the other. That way, you can’t be held responsible for debt allocated to your ex-spouse during the divorce.
If one of the parties files for bankruptcy after the divorce, divorce debts listed in the hold harmless agreement can be discharged depending on which type of bankruptcy you file.
For example, Chapter 7 bankruptcy cannot discharge the hold harmless agreement but can discharge your debts. Whatever debt you have can be eliminated by bankruptcy. Still, creditors can go after debts in both of your names, like a mortgage.
There is nothing that you can do to stop the creditors from going after your ex-spouse for those debts, but then your ex-spouse can take you to court using the hold harmless agreement to force you to deal with the creditors on their behalf. Essentially, the hold harmless agreement means that you are responsible for the debt that your ex-spouse owes and damages that creditors can do for coming after them.
Chapter 13 bankruptcy is different. It removes your debt but also breaks the hold-harmless agreement. That way, you can discharge your mortgage in bankruptcy, and you are not responsible when the creditor goes after your ex-spouse for the mortgage.
Having a Saint Cloud divorce attorney review your hold harmless agreement gives you extra defense against potential problems. Hold harmless agreements are, at their core, contracts that need to be negotiated and enforced. Bankruptcy attorneys can help with this by analyzing your situation and taking action to protect you from any problems. Contact Kain + Henehan by calling (612) 438-8006 or filling out the online form to discuss your situation and create a plan to deal with a hold harmless agreement.