Post Separation Agreements and Bankruptcy
BY: William R.F. Conners
Managing Partner and Founder
The declaration of bankruptcy does not automatically excuse the bankrupt party from paying what is owed to the other spouse. Generally, debts to a spouse, former spouse, or child of the debtor, that are incurred in the course of a divorce or separation or in connection with a separation agreement or court order, are non-dischargable. For example, a bankruptcy court recently held that a man who declared bankruptcy still owed his ex-wife payments toward a loan to her parents where the terms of his payment obligation were included in the couple’s PSA in contemplation of divorce.