How Long Does Bankruptcy Stay On A Credit History
A bankruptcy will be reflected on credit history for 6 years, but it is possible to apply for and obtain new credit within as little as two or three years . Many people who file bankruptcy go on to successfully get a new credit card, mortgage or vehicle financing within just a few years of bankruptcy discharge / completion.
How Does Bankruptcy Affect My Spouse
If a husband files bankruptcy without his wife, only the husbands debts are discharged. If the debts are held jointly, the non-filing wife will still owe even after one spouse has filed bankruptcy.
The bankruptcy filing will appear on the husbands credit report, but should not appear on the wifes. 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. A non-filing spouse should not have their as a result of their husband or wife filing for bankruptcy.
If Filing Bankruptcy Consider Spouses Assets
Beyond just debt, another issue for married couples to consider when evaluating bankruptcy is how assets are held. If one spouse owns property in her name only and doesnt file bankruptcy, it wont become part of the bankruptcy estate.
This could be an important factor depending on the value of the asset, because Chapter 7 is technically a liquidation. All the property you own that exceeds the value of your states exemption laws is subject to sale by the bankruptcy trustee. However, the trustee only has jurisdiction over the property of the party that files. For example, a wifes home that is only in her name does not become part of her husbands bankruptcy estate.
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Do I Need An Attorney To File For Bankruptcy
While its true that one spouse can file for bankruptcy without the other, its important to speak with an attorney about the consequences and possible benefits.
An attorney can help you in many ways.
- help you understand community property law in Texas.
- provide you insight regarding which type of bankruptcy to file.
- offer instruction on the relationship between bankruptcy and credit score.
- and, counsel you about whether you should file jointly or separately.
The attorneys at Warren & Migliaccio, LLP in Plano know how confusing filing bankruptcy can be, and are ready to answer all of your bankruptcy questions. To set up a free case consultation today, call us now at 888-584-9614 or use our online contact form to set up an appointment to get started.
What Is A Licensed Insolvency Trustee
A Licensed Insolvency Trustee is a federal government licensed debt help professional who is also an officer of the court. Despite claims that an LIT only works for your creditor, which are not true, an LIT actually acts more like a mediator between debtors and creditors, using the federal Bankruptcy and Insolvency Act to ensure fairness for all parties. If you are struggling with debt, an LIT will be able to explain every option to help find the best solution for you, and is the only licensed debt professional who can file a bankruptcy or a consumer proposal on your behalf.
Bankruptcy What Is It
The Australian Financial Security Authority defines bankruptcy as a legal filing or declaration that an individual cannot pay their debts. Also known as a state of personal insolvency, bankruptcy is an option that individuals can consider and must themselves initiate when they are trying to get a handle on unmanageable debt.
If and when you decide to instigate this, youre essentially entering into voluntary bankruptcy, known as a debtors petition. However, this is just one of the options open to you under the Bankruptcy Act of 1966. Before you take this step, make sure to seek free financial advice on your next best course of action.
To be eligible for filing for bankruptcy, you must:
- Show that youre unable to pay your debts when they are due
- Be present in Australia or have a residential or business connection within the country
However, there is no upper or lower ceiling on the amount of debt and there is no fee to apply for bankruptcy.
Chapter 7 Bankruptcy Alone After A Divorce
There are still reasons to file for bankruptcy by yourself after a divorce is officially granted. Together a couple may bring in too much income to qualify for bankruptcy. They cant pass the means test.
In this case, you can wait until the divorce is final and then file alone. Your single income may be low enough to now qualify for Chapter 7 relief.
This is also the right choice if you and your ex are trying to protect certain assets. The partner not facing money issues can take control of a property or possession in a divorce settlement to protect it from a bankruptcy trustee. Its important to have an experienced bankruptcy attorney helping you with these matters so that you dont inadvertently end up committing bankruptcy fraud.
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Can I Put My Property In My Spouses Name And File For Bankruptcy
If you are married and preparing to file for bankruptcy, you may be wondering how it will affect your spouse. While you can file individual bankruptcy, there are still potential consequences for your spouse. Generally, it depends on what joint property you own, whether or not you live in a common-law property state, and which type of bankruptcy you are filing.
As most of the information out there talks about joint property and debts being affected, many individuals think they can just transfer property to their spouses name to solve the issue. Unfortunately, its not so simple. In most cases, a judge will reverse the transfer, especially if it is apparent that it was done to evade creditors. If you are unsure of what you can and cant do and what will happen when you file, you can reach out to an experienced bankruptcy attorney for help. They can guide you through the process to work towards the best possible outcome for you and your family.
Does The Licensed Insolvency Trustee Seize My Assets During My Spouses Bankruptcy
As the spouse of a bankrupt individual, separate assets you own solely are not of interest to your spouses bankruptcy estate or Licensed Insolvency Trustee.
Its important for both you and your spouse to know that filing a bankruptcy does not mean a person automatically loses assets. In BC there are a number of assets that can be claimed as exempt from seizure and are therefore safe from creditors in fact, the majority of individuals filing for bankruptcy will retain all their assets.
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Supplementary Credit Cards In Bankruptcy
A supplementary credit card is a second credit card with the same account number as the primary credit card.
If your spouse has a supplementary credit card the debt may be considered jointly held debt and your spouse will be responsible for the debt if you go bankrupt.
If they are willing to speak to the spouse with the supplementary card the debt will be considered jointly held.
However, if the bank will not speak with you about the credit card then the bank will consider the debt separately held, which is why they wont speak to you about the debt.
If you have any questions about this or other aspects of bankruptcy or consumer proposals you can set up a FREE consultation with our trustees, who are in every province and territory in Canada.
Need Help Reviewing Your Financial Situation?Contact a Licensed Trustee for a Free Debt Relief Evaluation
Individual And Joint Debt
Make sure to speak with your spouse and discuss how filing for bankruptcy will affect them.
Joint debts are handled differently than individual debts. The individual debt of one spouse who files for bankruptcy will be discharged the other spouses debts remain unaffected.
When a husband and wife share debt, as in joint debt, the spouse who files is equally responsible for the repayment of that debt as the non-filing spouse. Although one spouses debt is discharged, the debt may appear on the other spouses credit report.
Illinois bankruptcy laws allow spouses who file bankruptcy jointly to claim a set of exemptions. In Illinois, exemptions can be described as personal property, such as condos or farms, motor vehicles and health or disability benefits, among others.
Filing bankruptcy jointly will increase the number of exemptions the married couple can claim. As a result, the trustee assigned to your bankruptcy case has no power to put your property up for sale.
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Can My Spouse Lose A Job If I File For Bankruptcy
An employer cannot fire spouses simply because they have a partner going through bankruptcy. They also arent allowed to fire you for filing bankruptcy. This would be discrimination and grounds for a lawsuit.
Your bosses also cant demote you or treat you unfairly simply because theyve gotten wind of your financial situation.
When Shouldnt You File For Bankruptcy Without Your Spouse
Its not recommended to file bankruptcy without the spouse under these situations:
- You and your spouse have joint debts. Filing bankruptcy separately will still negatively affect your spouses credit score. The bankruptcy discharge will only apply to you but it wont protect your spouse from debt collectors.
- You dont want to include your spouses assets in the bankruptcy estate. Whether you file for bankruptcy, all your marital assets will be included in the bankruptcy estate if you live in a community state, even if the assets belong to your spouse alone.
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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.
What Happens To My Credit Rating When I File For Bankruptcy
Its important to note that if youve been missing bill payments, have used up all or most of your available credit, or your debt has become unmanageable and youre thinking about filing for bankruptcy, your credit rating will most likely already be negatively affected. Filing for bankruptcy will impact your credit score, giving you an R9 rating, which will stay on your file for approximately seven years. However, bankruptcy can offer you a fresh start, and help you to rebuild your credit score faster than some other debt relief solutions.
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Can I File Bankruptcy Without My Spouse
Can you file bankruptcy without your spouse? The answer is yes, filing bankruptcy without a spouse is legally permissible, although you may have to include information about your spouse on your forms, also known as schedules, when you make your petition to the bankruptcy court.
Here are some valid considerations and answers to frequently asked questions. If you file for bankruptcy without your spouse, it will typically not affect your spouses credit, unless the debts you are attempting to discharge are joint debts, meaning that you and your spouse applied for them together, such as a credit card or bank loan with both of your names on it. In this case, your bankruptcy filing may appear on your spouses credit report, and your creditors may have a second option coming after your spouse even if bankruptcy results in a discharge of your debt.
Beyond just debt, another issue for married couples to consider when evaluating bankruptcy is property owned by the spouses. If one spouse owns property in their name only and is not the spouse filing bankruptcy, it generally wont become part of the bankruptcy estate. This is especially important in Chapter 7 liquidation bankruptcies, because the non-filing spouses completely-separate property will not become part of the bankruptcy estate, will not be subject to sale to pay creditors, and can exceed any applicable Texas or federal exemption amounts that would typically be applied in order to protect the property.
How Does Bankruptcy In Canada Affect Your Spouse
As a general rule if you file for bankruptcy in Canada it does not directly affect your spouse. What you will find is that your debts are yours and yours alone. However, there are some instances where your spouse may be affected.
If your spouse has co-signed, or guaranteed a debt for you
If, for example, you and your spouse have a joint credit card, you each gave your commitment that the credit card will be paid in full, regardless of what happens to the other party. So if one spouse should disappear, refuse to pay, pass away or file for bankruptcy the other spouse is still responsible for that debt, in full. If you file for bankruptcy and your spouse, or anyone for that matter, has cosigned or guaranteed a debt for you they will likely be pursued by your creditor to repay that amount.
If you and your spouse own property together
It is not always a problem if you and your spouse own property together. If all the property you and your spouse own jointly falls within the bankruptcy exemption limits set by your province then you dont have to worry. However, if you own property that is over and above these exemptions, then your portion of these assets may have to be sold as part of the bankruptcy. This would clearly impact your spouse.
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How Will An Automatic Stay Affect My Divorce
If youre going through a divorce and your spouse files bankruptcy, it can bring the process to a standstill until bankruptcy proceedings are complete. The court will put an automatic stay on all debts , thereby halting collection efforts by creditors. Typically, an automatic stay also stops the division of property and debt if youre in the midst of a divorce.
Thats why most bankruptcy lawyers recommend that clients file bankruptcy after their divorce is finalized. If youre on good terms and it will benefit you both financially, you may also want to consider filing a joint bankruptcy before filing for divorce.
Do I Need A Bankruptcy Lawyer
Filing for bankruptcy is a very complicated process. Bankruptcy law varies depending on where the action is filed and which chapter of bankruptcy is being pursued. A local bankruptcy lawyer will know the particulars of filing for bankruptcy, can recommend what chapter of bankruptcy is right for you, and can ensure that your paperwork is filed correctly.
If creditors are still trying to collect after a bankruptcy action has been filed, a lawyer may be able to halt such collection efforts and may be able to get you some money damages.
- No fee to present your case
- Choose from lawyers in your area
- A 100% confidential service
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When Does Bankruptcy Makes Sense For My Family
If creditors can collect from jointly owned assets, bankruptcy might be a good way to protect those assets. However, your spouse’s income will be included in the bankruptcy, which might make it harder to qualify for Chapter 7 bankruptcy and might affect how much you must pay to unsecured creditors in Chapter 13 bankruptcy.
What Happens To Personal Assets If You File For Bankruptcy While Getting A Divorce
What happens to unsecured assets in the case of both a bankruptcy and divorce, depends on which process occurs first, and who has rights to the assets at that time.
If bankruptcy first:
If someone files for bankruptcy first, their assets are transferred to their bankruptcy estate and are no longer available for distribution to their ex-spouse.
If separation or divorce first:
If assets are transferred to an ex-spouse as part of as part of the divorce agreement or legal separation agreement before the person files for bankruptcy then those assets are no longer available to creditors in the bankruptcy.
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Filing For Chapter 7 Bankruptcy Without Your Spouse
Chapter 7 is considered a liquidation filing. In other words, nonexempt assets are sold to pay off as much debt as possible. Debt is discharged, and the filer lives with the hit on the credit report and score for the next 10 years.
A means test is required when filing Chapter 7 bankruptcy it basically determines if you qualify for Chapter 7. Its based on household income from six months before filing the petition. If the couple shares the same house, your spouses income must be included in the means test, even if you filed on you own. Expenses that do not benefit the household can be subtracted from the spouses contribution to the household income. More on that to come.
Once Chapter 7 is filed, an automatic stay is put in place. This legal action stops garnishments, foreclosures, repossessions and any debt collection lawsuit. But the stay only applies to the individual who files. If there is any joint debt shared by the couple, the spouse continues to remain responsible for that debt.
Its important to know if you live in one of the nine community property states. If so, the automatic stay extends to the community property of the couple that was earned or acquired during the marriage. This typically means the non-filers wages cannot be garnished for community debt in those nine states.
Once the Chapter 7 filing is discharged, the only person protected by the discharge is the individual who filed. The non-filing spouse remains liable for any joint or co-signed debts.