What happens to joint debts in one spouse’s bankruptcy?
The discharge in bankruptcy is personal to the debtor spouse and does not extinguish a joint debt for the spouse who did not file bankruptcy. The debtor spouse is no longer liable for that particular joint debt to the creditor, but the non-filing spouse remains liable to the creditor for the full amount of the debt.
In Virginia, a separation agreement or court order can allocate debt between spouses. One spouse can agree, or be ordered to pay, a joint debt and to hold the other spouse harmless from the debt. While this can affect the liability between the spouses, it does not affect the liability to the creditor who was not a party to the contract or the divorce case. In the absence of a bankruptcy discharge, the creditor may sue either or both spouses for satisfaction of a joint debt. With a bankruptcy discharge of one spouse, the creditor may look to the other spouse for full payment of the joint debt.
As discussed in the answer to the question, “Can my spouse discharge family law debts in bankruptcy?”, a spouse may only discharge non-domestic support obligation debts to the other spouse, related to separation and divorce, in a chapter 13 case and not in a chapter 7 case.
A challenging issue is the Virginia court’s right to use its contempt of court powers when a spouse fails to pay a debt discharged in bankruptcy. You should consult with a bankruptcy or divorce lawyer to discuss your particular situation.