My Spouse Is Filing For Bankruptcy Now What
As Licensed Insolvency Trustees we often receive questions from the spouse or common-law partner of someone who is considering filing for bankruptcy. Along with wanting to be supportive of their partners financial rehabilitation, they often have a range of concerns about how a bankruptcy will affect their own financial standing, credit or assets. Read on to help clear the air around some frequently asked questions you may have about your spouse filing for bankruptcy:
When You Might Want To File After Getting Married
If you and your spouse both have a significant amount of debt, you may want to file for bankruptcy together after you get married. This will allow you to save money on court costs and legal fees because you’ll only need to file one case. You’ll also save time on meetings with trustees and creditors.
It’s important to note that if you go this route and you or your spouse has significant property assets, they’ll be a part of your bankruptcy sale. In this situation, it’s a good idea to file for bankruptcy individually so you can protect these assets.
Will I Be Responsible For My Spouses Unpaid Debts If They Go Bankrupt
The act of marriage on its own does not give your spouses creditors the right to demand payment from you for your spouses unpaid debts if they file bankruptcy.
You will not be responsible for repaying the creditors for the debts eligible to be discharged unless you have co-signed on the debts included in your spouses bankruptcy. In the event that there was a co-signer on the debts then the responsibility of repayment would then fall to that person. A spouse could also wind up liable for credit card debt if they used a supplementary card with their own name on it.
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Will My Spouse Have To Pay Our Joint Debts During Chapter 13 Bankruptcy
Probably not. The Chapter 13 automatic stay stops creditors from coming after your codebtors, including a spouse. If you won’t pay off the joint debt in your repayment plan, a creditor might ask the court to lift the codebtor stay. If that doesn’t happen, your spouse should plan to pay any balance remaining after your Chapter 13.
Will Bankruptcy Show Up On Your Spouses Credit Report
The bankruptcy filing will appear on your credit report, but should not appear on the non-filing spouses credit report. If a non-filing spouse receives an adverse rating on their credit score as a result of their spouses bankruptcy, the matter should be addressed immediately with the credit reporting agencies.
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Can One Spouse File Bankruptcy Alone
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Financial hardships may come at some point, and sometimes your only way out is through bankruptcy. Can you file it without your spouse?
Yes, you can file for bankruptcy without your spouse. And it makes the most sense when you and your spouse keep your finances separate, or you dont want to affect your spouses ability to file for bankruptcy in the future.
Should I File Bankruptcy Jointly Or Individually In California
There are many factors that enter into whether or not its most beneficial to you to file jointly or individually in California, and they depend on your specific circumstances. But here are two to consider:
- In California, you may be able to take more in the way of exemptions if you file with your spouse, which is a good reason for filing a joint bankruptcy for many people. If you cannot exempt all property without filing jointly, then filing jointly with your spouse may be the better course. Discuss this with your attorney, because you have options regarding exemption methods in California.
- Since creditors cannot come after your community property even if just one of you file bankruptcy, it may be to your advantage to file individually in order to preserve your spouses good credit rating.
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Advantages Of One Spouse Filing
I frequently recommend that only one spouse file bankruptcy. The reasons and advantages are many in a community property state like California.
All of the couples community property is protected from creditors, regardless of which spouse files the case. One advantage to filing alone is to preserve the others right to file bankruptcy later, should there be debts that arent dischargeable in the first case.
I think of the right to file bankruptcy as a valuable commodity which shouldnt be squandered when there might be a need for debt relief for the couple sooner than the Bankruptcy Code permits another filing.
I use single spouse filings to get couples below the Chapter 13 debt limits, or to protect an underwater home while the couple seeks a loan modification.
So whether your spouse is game to file or not, you can, and perhaps should, file bankruptcy alone.
What Are Bankruptcy Options For Married Couples
A key question that faces married couples who are deep in debt is whether to file for bankruptcy separately or together. Couples have the option of filing a joint bankruptcy petition where a single bankruptcy case is filed for both partners. This has the advantage of costing less than filing two separate cases because only one filing fee is required. Additionally, both spouses benefit from an automatic stay that stops collection actions against both. Further, debts held jointly will be discharged through the jointly-filed bankruptcy.
One or both spouses also have the option of filing separate bankruptcy petitions. If one spouse files, only they will receive an automatic stay and only their debt will be discharged. The other spouse will not benefit from the automatic stay and will still be liable for any debts held jointly. Filing alone will work, however, if one spouse incurred debt in their name and is not burdened with jointly-held debt.
Whether you file bankruptcy alone or jointly with your spouse depends on three key considerations:
Protecting Your Property Personal Items And Privacy
People often wonder whether filing bankruptcy without their spouse will protect their home, car, and treasured personal possessions. Will filing alone safeguard these things and prevent your spouse from being hounded for payments?
In Indiana, if your spouses name is on the debt, they can still be pursued for payments after the debt is discharged in your name. This means a foreclosure, repossession, garnishment, or other action can continue against your spouse even after youre freed of it through bankruptcy but only if their name is on the debt.
This is certainly something to consider before filing bankruptcy without your spouse. However, dont give up hope if your spouses name is on much of your debt.
Indiana allows you to protect your home and some types of personal property through exemptions. An Indiana homestead exemption, for example, could protect the family home so you dont lose it. Ask your bankruptcy attorney about applicable exemptions.
Youll also need to choose between Chapter 7 or Chapter 13 bankruptcy. If you opt for Chapter 13, an automatic co-debtor stay prevents creditors from hassling either you or your spouse about shared debts. But a Chapter 7 automatic stay applies only to you, allowing creditors to keep contacting your spouse.
Filing Bankruptcy Without Your Spouse In Arizona
Spouses typically apply for loans and credit cards jointly, in both of their names. This makes each of them contractually liable for the debt. But occasionally debt is taken out in only one spouses name during marriage. In these situations, the spouse named on the debt is contractually liable for the debt, and the other spouse is not. People often mistakenly assume this means the un-named spouse has no liability for the debt, and therefore need not consider filing bankruptcy if the debt isnt paid. Unfortunately, that is not a correct assumption here in Arizona.
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Bankruptcy And Your Partners Belongings
Your partner should be able to keep all of their assets if you declare yourself bankrupt. This means they wont have to give up any of their wages or savings, high-value possessions they own themselves or their shares in any property.
If you own things together say a vehicle your partner can either buy out their share or it will be sold. They will receive their half of the money when it is sold and the other half will be put towards the bankruptcy.
Can I File Bankruptcy Without My Spouse Knowing
Yes, although for the reasons discussed herein and the significant emotional impact that bankruptcy can have on your life, as well as the practical implications of its effects on joint property, it is not generally recommended to keep a bankruptcy filing a secret from your spouse.
Additionally, even though it is legally possible to file a bankruptcy case without your spouse, you will need to include certain information about your spouse on the bankruptcy forms, which ask for household income, marital assets, life insurance policies and beneficiary information, and information about whether debts are independent or joint.
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Can I File A Bankruptcy Without My Spouse
The short answer is, yes. If one spouse is carrying debt or the majority of the debt, that spouse may be desirous of filing a Chapter 7 or Chapter 13 Bankruptcy. A Bankruptcy filing is associated with a social security number and although only the filing partys social security number will be listed and associated with the filing, there is other information that is gathered from the non-filing spouse.
Bankruptcy involves household income and household expenses. In most cases, for bankruptcy purposes, if a married couple resides together both of their incomes and expenses would be taken into consideration to determine what chapter of bankruptcy would be best, even though only one party is filing.
Another common question relating to one spouse filing bankruptcy is whether the non-filing spouses assets, such as their car or real estate are protected. Any assets that are solely the assets of the non-filing spouse are not part of the bankruptcy estate and therefore are not made part of the Bankruptcy proceedings. Accordingly, the non-filing spouses assets are deemed to be outside of the bankruptcy proceedings.
If the asset are owned jointly, a bankruptcy attorney will value the asset and determine the filing partys equity interest in the subject property. If the share of the asset is greater than the protections allowed by law, the asset is not forgiven, rather the debt would be repaid through a Chapter 13 payment plan over 3-5 years.
What Happens To Debt In A Divorce
In the province of Ontario when you get divorced, all matrimonial property is split between the husband and wife. However, with joint debts if you get divorced the debt is not split and you both remain equally responsible to ensure all debts are fully repaid.
In fact, even if you have a legal separation agreement which states that each person is to assume half of any joint debts this will not release you from your spouses portion.
In simple terms, if you are joint with your ex-spouse on a debt, its not a 50/50 split its a 100%/100% split, because you are both fully liable for the debt. In the case of divorce and bankruptcy, if one spouse declares bankruptcy, the other spouse is fully liable for the joint debt.
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Can A Married Person File Taxes Without Their Spouse
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In a Nutshell
A married couple filing income tax returns can choose to do so married filing jointly or married filing separately. In the past, the primary reason for filing separate tax returns was to shield one spouse from the tax liability of the other spouse. Couples filing separate returns paid much more in income taxes than couples filing joint returns. Today, with tax law changes, there are situations where filing separately can result in a lower combined tax burden.
Written byAttorney John Coble.
Will My Chapter 13 Bankruptcy Affect My Spouse’s Interest In Our Joint Property
No, because Chapter 13 trustees don’t sell property. However, the trustee will factor your interest in nonexempt property into your case , and it can drive up your monthly payment amount fast. Why? Because if you want to keep a nonexempt asset in Chapter 13, you must pay an amount equal to its value in the Chapter 13 repayment plan.
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How To Deal With A Car Loan When Only One Spouse Files
In a Chapter 7 bankruptcy filing there are three ways to deal with car loans:
You keep everything basically the same including the car loan and its terms. This is called reaffirming your car loan. The debt is not discharged.
You borrow money to pay the bank what the car is actually worth and eliminate your responsibility to pay off the rest of the car loan. This is called redeeming your car.
You walk away from the debt and surrender the car to the bank. No matter how much you owe on your car loan, itâs eliminated by the bankruptcy discharge. You get to start fresh with a new car after filing bankruptcy.
If you have a co-signer on your car loan , you may be able to keep everything the same without signing a reaffirmation agreement. More on that in this article titled What happens to the co-signer of a car in bankruptcy in 2021?
If I Am Married Can I File Bankruptcy Alone
Will my bankruptcy affect my spouse?
Below is an article written by Attorney Peter Francis Geraci, you can read more articles at .
If I am married, can I file a bankruptcy without my husband or wife?
There are a lot of different answers so dont expect to call us and get the right answer without a virtual or in-person consultation with an experienced Geraci Law attorney. You will have to provide some detailed info to get a reliable answer.
. Married people file jointly, or separately, or just one. You can file alone. Filing a husband and wife case saves you on fees and costs. But there are reasons NOT to file joint cases, and reasons you should file together.
Example #1: I have credit card debt I cant pay and just got fired. My spouse makes $130,000 a year, but is not joint on my cards, but we have a joint checking account. I am on title to 2 properties with him but not on the mortgage. Can I file Chapter 7 and get a discharge
Answer: Probably not. Your household income is $130,000 even without you working. The Chapter 7 Trustee would object to discharge of your debt because the household income is sufficient to pay it. On top of it, you own ½ interest in real estate, and only a Chapter 13 debt repayment plan would enable you to discharge your debt and keep your property interest.
Result: When you are back to work, see us about a Chapter 13 debt repayment plan if your spouse and you cant pay off your credit cards.
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Should Both Spouses Always File Bankruptcy Jointly
Unless all debt was incurred by one of the spouses prior to marriage, and therefore that particular spouses separate debt, married couples usually file bankruptcy jointly. However, there can be good reasons for just one of the spouses to file bankruptcy, even when there is community debt. Some spouses choose to opt out of filing bankruptcy jointly to preserve their good credit score. If the debt is solely in the name of the filing spouse, the non-filing spouse does not own any separate property, and they intend to stay married, this can make sense. But its important to know that should the marital community terminate, such as through divorce, legal separation, or death, the non-filing spouse becomes subject to collection on the debt. This is because community property becomes separate property upon termination of the marital community, and thus, is no longer protected under the bankruptcy community discharge.
How Does Bankruptcy Affect A Family Home
The most common joint asset is the family home. The Trustee will arrange for the property to be valued and work out the likely equity. In that calculation they must allow for any mortgages and sale costs. It is usual to assume the asset is owned 50:50 unless there is something else in writing such as a deed of trust.
It is worth reviewing this calculation quite carefully. One common issue missed is the equity of exoneration. If your spouse has raised funds on the property to invest in a business this must come off their half share. In addition, if you have put in different amounts as the deposit this may be reflected in the equity split.
It may be possible to agree with the Trustee to buy out a bankrupt spouses share of the equity. The Trustee would usually prefer to do this than force a repossession and sale to save time and costs. A small discount may also be given to the non-bankrupt spouse for reaching this type of agreement. Usually the mortgage company, if you have one, will not take any action so long as the interest continues to be paid.
Usually, if the Trustee is ignored, then after one year they will start proceedings for possession. The Trustee has three years from the date of bankruptcy to start this process.
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