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Does Declaring Bankruptcy Affect Your Spouse

If My Spouse Files Bankruptcy Will I Be Bankrupt Too

How does bankruptcy affect my spouse in Canada

Simply put NO! One person filing for personal bankruptcy does not automatically assign their spouse into a bankruptcy, full stop.

If both you and your spouse share the same joint debts or each have your own separate debts that youre unable to repay, you may both decide to start a bankruptcy at the same time, but this is your decision not a requirement in the law.

Sometimes one spouse may be in a position to repay a portion of their debt, but the other spouse is unable to afford any repayment in this situation one spouse may decide to file a Consumer Proposal and the other a personal bankruptcy.

What is a Consumer Proposal?

A Consumer Proposal isnt the same process as bankruptcy. A Consumer Proposal is a specialized debt consolidation tool you can access by working with a Licensed Insolvency Trustee. Essentially your consolidated debts are reduced down to what you can afford to repay , with the unpaid balance being forgiven by your creditors. Learn more about Consumer Proposals here.

Can One Spouse File For Bankruptcy Without The Other

Marriage vows bind couples together for richer and for poorer. Bankruptcy laws, however, view married couples differently. Can one spouse file for bankruptcy without the other? How will bankruptcy affect your spouse?

You can file for bankruptcy as an individual or together with your partner. The path you choose depends on both of your financial situations. To learn more about filing for bankruptcy when you are married, speak to a Charlotte NC bankruptcy attorney at the Law Office of Jack G. Lezman, PLLC today.

Work With A Bankruptcy Attorney

Married couples have the option to file for bankruptcy without their spouse. Joint bankruptcy filing is not mandatory under any laws. A knowledgeable bankruptcy lawyer will empower a husband and wife team to achieve their financial goals. The bankruptcy attorneys at Berry K. Tucker & Associates, Ltd. are positioned with the legal expertise and knowledge to help navigate couples on the brink of bankruptcy through their many options.

Whether you and your marital partner are inclined to file for Chapter 7 or Chapter 13 bankruptcy, the skilled bankruptcy attorneys at Berry K. Tucker & Associates, Ltd. have the experience with both forms to offer expert legal advice. Filing for Chapter 13 bankruptcy is a complex process. A can streamline following this route, should it be the most beneficial.

With 50 years of experience in bankruptcy proceedings, the Berry K. Tucker lawyers will negotiate on your behalf with loan companies if your car is repossessed; we will advise you on the best course to take when you are overwhelmed with credit card debt; our medical debt bankruptcy attorneys will offer you legal options in regard to medical debts; and we will fight for you when you are faced with a home foreclosure.

Gifting And Selling Items Of Value To Your Spouse During Bankruptcy

Its important to note that you must not give or sell any items of value to your spouse to leave them out of the bankruptcy. This is bankruptcy fraud and is an offence. If you are caught doing this you could be fined or even sent to prison and the bankruptcy restrictions that last for the 12 month period of the bankruptcy could be extended for up to 15 years.

Individual And Joint Debt

How Will Claiming Bankruptcy Affect My Spouse?

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.

Spouses File Jointly Under Chapter 13

A key point to keep in mind is that filing a joint Chapter 13 is much cheaper than filing individually:

  • Chapter 13 bankruptcies are more expensive to file than Chapter 7 bankruptcies so this is something to keep in mind.
  • This can be a great way to protect your assets if both spouses have a lot of joint debts or multiple debts individually.
  • You could double your exemptions if you jointly file for bankruptcy. These exemptions are used to protect your property from a sale by the trustee assigned to your case. 

Note: You might be interested in reading our blog post Can you go to jail for debt?.

Is My Childs Work Income Included For The Calculation Of The Means Test

The Means Test determines whether you have too much income to file a Chapter 7 bankruptcy. In some cases, you will have to include your childâs income, but in most cases, you will not. The Bankruptcy Code requires that you include income earned by dependents that contribute to the payment of household expenses. The question is, was the income used to contribute to the payment of household expenses? In many cases, the child’s income goes to pay for the child’s recreation. For example, the child uses the money to pay for dates or nights at the movies. In this case, the child’s income isn’t included in the Means Test. In some cases, if your child is using all or a part of their paycheck to help out with utilities, rent, or groceries, the amount theyâre contributing is considered part of your household income in the means test and on your Schedule I . 

The Codebtor Stay In Chapter 13 Bankruptcy

If you have joint obligations with your spouse, filing for Chapter 13 bankruptcy can protect your spouse from those creditors with the codebtor stay. The Chapter 13 codebtor stay prohibits creditors from coming after your codebtors during your bankruptcy. But keep in mind that creditors can ask the court to lift the codebtor stay if you don’t pay off the joint debt in your repayment plan.

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    If My Spouse Files For Bankruptcy Do I Need To As Well

    How Will Bankruptcy Affect My Spouse?

    One of the most frequent questions our married clients ask is how an individuals decision to file for bankruptcy will affect their spouse and the debts that they hold with their spouse. To answer this question, it is important to understand how courts handle debts that are jointly owned by a married couple.

    Initially, it is important to dispel the common myth that married couples are automatically liable for the others debts. That is not the case. Typically, if the husband is filing for bankruptcy, the wife will not then be liable for all of the husbands debts. If the husband files for bankruptcy, it should not affect the wifes credit score. Of course, if a husband and wife both incur debt together, the situation is different. In this case, when the husband files for bankruptcy, the husband will no longer be responsible for the debt, but the wife will be entirely responsible for it. Thus, it is very important to understand the total assets and debts of each spouse before either spouse decides to file for bankruptcy.

    Married couples can, but do not necessarily have to, file bankruptcy jointly. When a couple files bankruptcy together, the trustee will liquidate all of the couples assets and use the proceeds to pay off the couples collective debts. This option also saves on the filing fee associated with filing for bankruptcy.

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    How Does My Bankruptcy Affect Our Property

    If you own property together, but it’s worth less than the available exemptions, your bankruptcy will have no effect. If you or your spouse owns a home, it’ll be protected by the homestead exemption as long as it’s not worth too much.

    It gets trickier if your spouse owns property that is worth more than what youâre able to keep during your bankruptcy. Depending on where you live, any property that your spouse purchased during your marriage may be considered to be joint property, even if your spouse purchased the property with a separate financial account.

    Community Property States

    This rule applies in âcommunity property states,â which include Louisiana, Arizona, California, Texas, Washington, Idaho, Nevada, New Mexico, and Wisconsin. In these states, both spouses have joint and equal ownership over most property acquired in the marriage even if only one spouse is on title.

    Debtors not located in one of these states generally do not have to worry about the trustee coming after their spouseâs property during a bankruptcy, even if the spouse owns property worth more than what the exemptions permit.

    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.

    How Does Filing Bankrcupty Affect My Spouse

    Does my bankruptcy affect my spouse?

    A married person in overwhelming debt, and who has to file bankruptcy, startswondering if bankruptcy should be filed with or without the spouse. Theyworry about how their decision impacts their family, and are especially worriedabout its implications on his or her spouse and their credit report.Some even worry about their spouse losing their job or that both partners areobligated to file for bankruptcy. They usually end up having these questionsrunning in their head, and look for answers to them:

    Will filing for bankruptcy affect my spouse’s credit?

    Answer: Mostly like NO.  This is the biggest concern of individuals filing for bankruptcy. Howevereveryone, married and single, have separate credit bureau files connected totheir social security number.  So as long as the spouse isn’t a co-debtor, or legally liable for the same debt, filing for bankruptcy to eliminate debt won’t affect the spouse’s credit score.But if the couple has joint debts and if the non-filing spouse is a co-debtor thenthey have more to worry about besides a negative report on their credit score.This is because when a spouse files for a Chapter 7 bankruptcy to discharge thejoint debt, there’s a chance of it appearing on the other spouse’s credit report. So the creditor can take immediate action against the non-filing spouse.  Besides, creditors will be notified about the spouse’s bankruptcy status and may bother the non-filing spouse to collect joint debts.

    How To Reduce A Nonfiling Spouse’s Income In Bankruptcy

    How Will Claiming Bankruptcy Affect My Spouse?

    Although you must include your nonfiling spouse’s income, you might be able to take deductions and pass the means test or lower your disposable income. The marital adjustment deduction allows you to deduct some of your spouse’s personal expenses if they’re paid with her own separate income. You can exclude that portion because it isn’t used to support your household.

    For more information on how this works, read The Marital Adjustment Deduction on the Means Test.

    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.

    Gifts From Your Partner

    Your partner isn’t allowed to give you items of value or sell them to you at less than their value in order to avoid them being taken away as part of the bankruptcy estate.

    The bankruptcy trustee will look at any gifts your bankrupt partner has given you or things you have bought from them.

    You might have to give the things back or pay the trustee for them. 

    Your partner could also be given a bankruptcy restrictions order. This would extend the period of time during which they have to follow certain rules restricting them for anything up to 15 years. It could also lead to them being fined and/or sent to prison.

    The trustee usually checks what your partner gave or sold to you over the last 5 years.

    They can check things that happened over 5 years ago if they think your partner has ‘defrauded creditors. This means they think your partner has deliberately sold things or given them away so they couldnt be used to pay their debts.

    If the official receiver or trustee says your partner has defrauded creditors, your partner should get legal advice.

    Im Engaged Will Bankruptcy Impact My Future Spouse

    Short Answer: Generally, your spouse or soon to be spouse will not be impacted by your filing bankruptcy.

    This is a topic that often comes up during a consultation with prospective clients. Let me start by saying there?s no such thing as a joint credit report or a joint credit score. Everyone has his or her own, and they aren?t combined when you marry. Having said this, your bankruptcy will not affect your future spouse?s credit scores. If your future spouse has not co-signed on any loans with you, then your bankruptcy will not affect him or her in any way.

    While your bankruptcy doesn?t affect your future spouse directly, it could affect your ability to get joint loans in the future should you decide to purchase a house, car, etc. The person who filed bankruptcys credit could make it more difficult to get approved for the joint loans and could trigger a higher interest rate.

    If you?re concerned that once you get married, your spouse will then become responsible for your debts don?t be! Your debts are YOUR debts. If you file bankruptcy and receive a discharge, most, if not all, of your debts will be eliminated. Your future spouse will not be liable to pay those debts.

    Which Property Is Part Of Your Bankruptcy

    How Your Spouse’s Assets Affect Your Bankruptcy

    In a common law property state, your separate property and your portion of any jointly owned properties become part of your bankruptcy. This means that if you do not have enough exemptions to cover these assets, then they can be taken and sold by the Chapter 7 bankruptcy trustee to pay your creditors.

    Your spouse’s separate property and his or her share of joint property are not included in your bankruptcy. However, if you have nonexempt joint property, the trustee can still force the sale of the entire asset to get to your portion . Before doing this, the trustee must usually try to partition the property to sell only your share if possible. If it cannot be divided, the trustee must show that the benefit of selling the property outweighs the detriment to the co-owners.

    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.

    Separation Or Divorce And Bankruptcy

    While your spouse is not liable by virtue of being married to you for your debts the same principle applies in a divorce. If you had joint debts while you were married, a divorce or separation agreement cannot legally remove any one spouse from the requirements to repay that debt. If you want one spouse to be removed from the obligation to repay joint debts, you will need to receive written agreement from your lender. If you are separated and one spouse files for bankruptcy, the other spouse will be liable for joint debts, no matter what your separation or divorce agreement says.

    These issues are complicated. It is often difficult to determine if a credit card is a joint card , or just a supplementary card .

    If you are considering filing for bankruptcy in Ontario and want to know how filing for bankruptcy in Ontario will affect your spouse, please contact a licensed Ontario bankruptcy trustee today for a free consultation.

    When you meet with the trustee, bring copies of all loan documents and recent statements so that the trustee can review them to determine if you have any joint debts.

    File For Bankruptcy After The Fact

    If you are asking yourself, can I sponsor my spouse before bankruptcy? The short answer is yes, you can sponsor your spouse first. The reality, however, is that this option is a little trickier. 

    For one, the timeline to complete your sponsorship could take longer than the average personal bankruptcy. According to the Government of Canada, it takes an average of 12 months to process a sponsorship application. You are also considered financially responsible for your spouse for 3 years after your application is approved. Unless you have surplus income, you will likely receive your discharge from bankruptcy after 9 months. You could put the process behind you in under a year. 

    You might also be wondering How does bankruptcy affect my spouse in Canada? When you sponsor someone, you promise the government that you can cover their basic financial needs along with your own. If youre bankrupt, this can be difficult to accomplish.

    Filing For Bankruptcy Or A Consumer Proposal In The Gta With David Sklar & Associates

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    If you are considering filing for personal bankruptcy or a consumer proposal, and you live in the Greater Toronto Area, you should contact David Sklar & Associates for help. Our licensed insolvency trustees have helped countless people address insolvency and put their financial issues behind them. Call us at 416-498-9200 to book a confidential and free consultation. We can help you figure out your next steps. 

    Applying to sponsor your spouse for immigration will already be a tough process. You dont want your financial issues to make it even tougher. Now you know how you can manage your financial recovery without sabotaging your sponsorship plans. 

    How Will My Bankruptcy Filing Impact My Spouses Credit And A Non

    Each individual has a separate and a unique credit report. When married, peoples s and credit reports are not blended. When both spouses are working, their respective employers do not blend or pool their combined monthly incomes.

    There is no or wage or salary aggregators that combine credit reports or incomes of married or common-law partners. That merely does not exist. So when people wed, their credit ratings are not combined or averaged in any way. They stay separate.

    For example, if you open up a in your own name and do not include your partner as a supplementary cardholder, the credit history and debt for that will never appear on your partners credit history record. If you make your payments on that separate and theyre on time, or even continually late, it does not aid or harm your partners credit rating. Different financial obligations are never ever reported on anybody elses credit report and do not impact their .

    Marriage or a common-law relationship, does not alter the fact that s and reports are not combined in any way. For that same reason if you file an assignment in bankruptcy on the separate debt it is also not recorded on your partners credit report and will certainly not influence their.

    single spouse bankruptcy

    Bankruptcy For Married Couples

    Question: Do I have to file bankruptcy with my spouse or include my spouses income, assets or debt in my bankruptcy if Im filing without them?

    Answer:  You are allowed to file a bankruptcy without your spouse however because the bankruptcy laws consider the total income of the household you must still disclose your spouses income as well as all assets and debts that are part of the community and in some situations the Court or Trustee may have questions about separate assets and debts that are not part of the community between you and your spouse.  Some non-filing spouses have concerns about this, however, you are only being asked to disclose the information and your individual bankruptcy should not show up as a bankruptcy filed by your non-filing spouse.  If you or your non-filing spouse have questions like this you should speak to one of our experienced bankruptcy attorneys.  We offer free initial consultation appointments.

    Above is a question we are routinely asked.  The short answer is no, you do not have to file a bankruptcy petition with your spouse you can file by yourself, however, there may be reasons you should consider filing together.  Additionally, even if you file on your own you will still be required to disclose your marital status, your spouses income and in most case all debts that have been created since you were married.  Please continue reading for to learn more about filing considerations for married couples.

    Joint or Individual Bankruptcy

    Can A Married Person File For Bankruptcy Alone How Does It Affect My Spouse

    In short, yes. Although it is commonly believed that bankruptcy will affect both partners when one files for bankruptcy, it only applies to the individual applying for bankruptcy. However, there are a few factors, in certain situations, where bankruptcy may impede on the non-bankrupt partner. If youre married and heading down the bankruptcy path, its important that you and your partner fully understand how it will affect both of your lives. You can read more on the pros and cons of bankruptcy in our blog on the subject. But, for your partner, read on to better understand the situations where filing for bankruptcy can affect them.

    They use an asset you own

    If there is an asset such as a car, or even a house, that is shared by you both, your partner cannot retain full use or financial autonomy of these assets. If you are joint owners, your Trustee becomes the owner of your share and the co-owner/s are unable to make any financial decisions about the asset without the Trustees permission. If you are unable to pay your debts on these assets, they may be repossessed . However, your spouse is able to submit an offer to purchase your share from the Trustee.

    You share a bank account

    If you have a joint bank account, the Trustee may claim half of the accounts balance.

    You have shared debt

    If youre worried about how bankruptcy will affect your spouse, contact Shaw Gidley today for a free consultation to better understand the process and how it affects your loved ones.

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