Filing for bankruptcy can be a long and messy process, but once it is over, the sheer relief you may feel is often worth the trouble. But what happens when only one member of a married couple files for bankruptcy, and how could your non-filing spouse be affected? Although spouses are typically kept clear of the fallout of a bankruptcy, there are a few areas where your husband or wife's finances may be impacted by your bankruptcy.
Distinguishing Your Debts
When you first file for bankruptcy, you will need to come up with a comprehensive list of all the debts you currently hold. Any debt that is solely in your name should be included as part of the filing. These debts are easiest to argue and settle, but if you need to include a joint debt, your spouse will need to file alongside you. If you aren't sure which should be included in your bankruptcy paperwork, consult with an experienced bankruptcy lawyer to get a clearer picture of your individual case.
Handling Joint Debts
Joint debts, on the other hand, such as a shared car loan or mortgage, are more complicated. In most cases, a joint debt will not qualify for bankruptcy when only one person files. Instead, responsibility for payments will fall to the other spouse, whose credit should not be affected. This can help you navigate bankruptcy without losing your house, but it can also make trouble for your spouse if a spooked lender decides to collect the rest aggressively. This usually only occurs during chapter 7 bankruptcies, since chapter 13 filings are typically completed under the assumption that your debts will later be repaid. When in doubt, having a bankruptcy lawyer on your side in these situations may protect your spouse from financial persecution as a result of your bankruptcy.
Checking Your Community Property Laws
Another sticky legal area when filing as a single spouse is any shared property that may be repossessed to offset the creditor's loss. In some states, this only applies to belongings that specifically belong to the individual filing for bankruptcy. Other states, however, follow common property laws, which declare that property gained in marriage belongs equally to both spouses under most circumstances. In these states, property owned by your spouse may also be subject to repossession by creditors. Check your state laws to clarify where you will stand legally. With adequate legal representation and a firm grasp of the law, you will hopefully emerge on the other side of bankruptcy with a clean slate and a spouse who has not been negatively affected by your previous financial decisions.
Share19 July 2016
When it comes to fighting in court, it isn't always easy to stay strong, stable, and secure in your convictions. Fortunately, by working with a great lawyer, things become much easier. About ten years ago now, I was accused of a crime that I didn't commit, and it was really heartbreaking. I started thinking about what to do, and a friend of mine suggested working with a great lawyer. It was incredible to see how much help the lawyer was, and within a few months, I was proven innocent. This blog is here to help people who might be fighting legal battles of their own.
