Bankruptcy And Marriage: 3 Ways Your Bankruptcy Will Affect Your Spouse
Posted on: 14 December 2015
If you are married to someone who has good credit, you might wish to file bankruptcy on your own. Doing so will shield your spouse from a lot of the realities surrounding bankruptcy and will also allow you to continue to benefit from their good credit standing. However, there are a few ways that your bankruptcy may still affect your spouse. Since each individual case is different, you should talk to your lawyer about what your spouse should expect after your bankruptcy is filed. Following are just a few of the things that might be true in your case.
Responsibility for Debt
If you file Chapter 7 bankruptcy and it is granted, most or all of your debts will be discharged, meaning you won't have to pay them. If your debts are separate from your spouse, they will have nothing to worry about. If you have joint debts, however, your spouse will become solely responsible for them after you file. If you don't want your creditors to go after your spouse for certain joint debts, you will have to file a structured Chapter 13 bankruptcy. Under this agreement, your creditors cannot pursue your spouse for payment as long as you follow the payment plan established in your bankruptcy.
Loss of Assets
During your bankruptcy, the court may determine that you have to liquidate certain assets to pay off creditors. If an asset is owned by you only, your spouse's net worth won't be affected, however, they will still lose use or enjoyment of the asset. If you live in a state where community or marital property laws apply to your situation, the court may call for the liquidation of property that you both own together. In these states, it is held that each of you have a 50 percent stake in the value of the property. While the court can't seize the monetary value of your spouse's ownership, they can still liquidate the property and take the 50 percent of the value that represents your half.
Hits to Credit Worthiness
While your spouse should maintain their credit rating after you file bankruptcy, your credit rating as a couple will suffer. If you try to open any joint accounts after the bankruptcy, your credit rating and the fact that you filed bankruptcy will be taken into consideration.
Filing single spouse bankruptcy is a great way to protect your spouse. However, your spouse may not come out of the bankruptcy entirely unscathed. Talk to your lawyer today, like Wiesner & Frackowiak, LC, to see how your spouse will be affected.
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