What Happens to Divorce Debts in Bankruptcy?

Debts in the nature of support of child or former spouse are not discharged in either chapter 7 or 13 bankruptcy.

What about property settlement debts?  If the divorce decree contains a hold harmless obligation that makes one spouse indemnify the other spouse, then the hold harmess oglibation is a separate debt to the spouse and is not dischargeable in chapter 7 bankruptcy 523(a)(5) or 523(a)(15).

The hold harmless obligations can be discharged in chapter 13 bankruptcy as long as the debt to the former spouse not a Domestic Support Obligation (DSO).  This is possible because property settlement debts under 523(a)(15) are not excepted from discharge in chapter 13 cases.  See Schuett v. Finkey, 2008 Bankr. Lexis 1555 (Bankr. D. Neb. May 21, 2008).

Help for Student Borrowers When School Closes

Student loans are not generally discharged in bankruptcy, but what happens when the school closes and the student does not receive the education she borrowed the money for? As long as the school closed within 90 days of enrollment or the last day attended, there is a remedy for student loan borrowers (but it is not a bankruptcy remedy).

Check out this link to search for closed schools. The regulation is 34 C.F.R. § 682.402(d). More help for student borrowers is available at www.studentloanborrowerassistance.org.

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