Doing The Right Thing Can Save You Heartache
In deciding when to file for bankruptcy, weigh your financial health with that of your marital health. The course of action you take may drag down your partner’s financial and credit health and, in turn, hurt your relationship. So have a candid conversation and put everything on the table before making your commitment. The good news is that filing for bankruptcy will likely change the way you spend and manage your money. This can help reduce the risk of money-related problems in your marriage and steer you and your spouse toward the right direction financially.
Obtain Additional Arizona Bankruptcy Filing Information
If you would like more information or legal advice on how your spouse would be treated if you go bankrupt, please feel free to e-mail your questions to one of our regional, Arizona based bankruptcy attorneys, they will be glad to help. now. Or, you can contact one of our offices and arrange for a free consultation. 833-8000 Phoenix Area Bankruptcy Lawyers or 306-8729 for a Tucson Area Bankruptcy Attorneys. Get yourself a Fresh Start today.
Other Factors To Consider When Deciding To File Separately
Every financial situation is unique, and there may be factors that contribute to filing without the spouse. A spouse may wish to protect a good credit rating, or a spouse may not have been part of the debt that led to bankruptcy. Just like people, marriages are unique and many factors should be weighed when deciding the best way to approach bankruptcy.
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Can Creditors Come After My Spouse If I File For Bankruptcy
When you file for bankruptcy, it eliminates only your personal liability for debts that are discharged in your case. Your individual bankruptcy doesn’t wipe out your spouse’s obligation to pay back his or her own debts or any joint debts you have together. This means that creditors can still pursue your spouse to collect your joint debts.
But there is an exception. If you live in a community property state and discharge the debts you owe jointly with your spouse, those creditors can only go after your spouse’s separate property after your bankruptcy. Because almost all property your spouse acquires during the marriage is community property , your spouse essentially receives the benefit of your discharge as well for your joint debts. This is commonly referred to as a phantom discharge.
For more information on how joint debts are treated in Chapter 7 bankruptcy, see What Happens to My Cosigner in Chapter 7 Bankruptcy?
Can Personal Bankruptcy Affect A Spouse
If you file for bankruptcy, it may still affect your spouse in various ways. When a person is made bankrupt, they will automatically have a Trustee in Bankruptcy appointed over their estate. The Trustee’s job is to realise the assets of the bankrupt person to pay off as much of the debts as possible. The first point to be clear on is that assets owned solely by a non-bankrupt member of a couple cannot be taken to pay for their spouses debts.
However, this can become more complicated and very emotional where jointly owned assets are involved. For example, couples will naturally not want to be evicted from their family home . Therefore, in any situation, couples will need advice on the complex rules relating to bankruptcy and what can and cannot be touched by a Trustee in Bankruptcy.
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How To Rebuild Credit After A Bankruptcy
While a bankruptcy will remain on your credit report for seven or 10 years, that doesn’t mean your credit score can’t improve during that time. As you add new positive information to your credit report, you can rebuild your credit score.
Here are a few things you can do to make it happen:
- Monitor your credit. It’s crucial that you check your and frequently. Not only does this help you keep track of your progress, but it also provides you with the information you need to address potential issues that could further damage your credit score.
- Pay your bills on time. Make it a goal to pay all bills on time going forward to avoid late payments. Remember, your payment history is the most influential credit score component, so it’s a top priority.
- Stick to a budget. It’s important to avoid debt that could potentially destroy all the work you’ve done so far. To do this, create a budget and stick to it. Try to avoid overspending and apply for credit only when absolutely necessary.
- Consider a secured credit card. A secured credit card functions similarly to a regular credit card, but requires an upfront security deposit as collateral for your credit line. As you use the card regularly, keep your balance low relative to your credit limit and pay your bill on time every month, you’ll be able to establish some positive history on your credit report. Plus, if you pay your balance in full every month, you can do all of this without paying a dime in interest.
Effect On Credit Scores
If only one spouse files for bankruptcy, the bankruptcy will only appear on that spouses credit report, not on the nonfiling spouses credit report. The nonfiling spouse also will not have any negative damage to his or her score because of his or her spouses filing, unless they have joint debt.
For those concerned about credit reporting, we can provide a letter for the nonfiling spouse to provide to the credit reporting agencies.
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What Happens To Spousal And Child Support Payments During Bankruptcy
Under the;Bankruptcy & Insolvency Act, bankruptcy will eliminate most of your unsecured debts but;will not;eliminate spousal support or child support payments.
Spouse paying spousal or child support:
In most cases, if the terms of the divorce or separation agreement agree to give one spouse certain assets in return for continuing to make support payments, and the paying spouse then files for bankruptcy, they will lose the assets. Spousal and child support payments, however, still have to be made.
Spouse receiving support or alimony:
Spouses owed;back support;payments can make a claim in their ex-spouses bankruptcy and receive a share of any dividend paid from the estate. Any alimony or support arrears for the 12-month period before the date of bankruptcy are considered a;preferred claim;and are paid out of the proceeds of the bankrupt;before;any other unsecured claims.
Any support amounts left unpaid are still owed by the paying spouse as those payments survive 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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What Happens When You File Bankruptcy
When you file bankruptcy, each of your open credit accounts should say included in bankruptcy.
- If the credit account is joint with your spouse , the joint account holders tradeline should NOT say included in bankruptcy
This is because the joint account holder did not file bankruptcy, and still owes all of the money.
A Chapter 7 bankruptcy or Chapter 13 bankruptcy discharge only discharges the debts of the person who actually files the bankruptcy, not cosigners or joint account holders.
The reason that lenders ask for cosigners is that they are afraid that the primary borrower might not be able to repay the loan, so they want someone else to pay it in the event of a bankruptcy or insolvency.
Will A Bankruptcy Filing For Only One Spouse Affect The Credit Score Of The Other Spouse
NO. As an experienced Denver bankruptcy lawyer, I encounter countless situations where it makes the most sense for only one spouse to file . This is most likely because the other spouse simply has little or no unsecured debt, is ineligible to file if having filed an individual chapter 7 recently, or owns significant assets with equity which would no longer be exempt from the bankruptcy estate if also added as a party to the petition.
A non-filing spouse is not responsible for debts help solely in the name of the spouse filing for bankruptcy. The credit rating agencies assign a credit score to each person and not to a family unit. So, if husband only files, the non-filing wifes credit score will be unaffected.
The exception is that the non-filing spouse still remains potentially liable for any jointly incurred debts. So, if the filing spouse is protected by the automatic stay provisions of the Bankruptcy Code, guess who the creditor will be pursuing?
One situation Ive been seeing more frequently in Colorado is where both spouses hold funds in a joint bank account, yet they owe a joint obligation to this same financial institution. immediately withdraw such funds prior to the bankruptcy filing as the financial institution will otherwise exercise its right to setoff the funds. A non-filing spouse will not have the right to seek reimbursement of funds taken from a jointly held bank account.
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If Im Married Will My Spouse Have To File Bankruptcy With Me
No. Keep in mind, however, that only the person filing for bankruptcy gets the benefit of the automatic stay and the discharge. So, if you and your spouse have joint debts and only you file bankruptcy, then those creditors will still be able to pursue your spouse for collection, unless you file for Chapter 13 and propose in your plan to pay those joint debts in full.
Being married, however, does not necessarily make one obligated for the debts of the spouse. Nor does merely being an authorized user on a credit card make that person personally liable. Only the person who signed the loan documents or credit application is liable for the debt.
Make sure to carefully check your documents to see who in fact signed them. One exception to this is taxes. Filing a joint tax return makes both spouses liable for the tax, regardless of whose tax it is.
If you and your spouse own property jointly, that property may be subject to liquidation in the rare case where the property is not fully exempt.
As far as future credit is concerned, the bankruptcy of one spouse will have some effect on the ability of the nonfiling spouse to obtain credit in the future if credit is applied for jointly. Otherwise, it should not.
We are a debt relief agency. We help people file for bankruptcy relief under the Bankruptcy Code.
Practice Areas
Community Property Vs Common Law Property
Can a married person file bankruptcy without a spouse? As weve explained, this is possible, and if you go this route, your bankruptcy will not affect any separate property that your spouse owns individually. But if you have jointly-owned assets, the treatment the assets will receive in bankruptcy depends on whether you live in a common law or community property state.
If you live in a common law property state, your individual assets and your interest in any property you own jointly with your spouse are considered part of your bankruptcy estate, and the property your spouse owns in his or her name alone is normally not at risk.
However, in community property states like Texas, almost all assets acquired by either spouse during the marriage are considered community property. In other words, property acquired by either spouse during the marriage is considered equally the property of both spouses, a 50/50 split. ;Because both spouses own community property jointly and equally, all of it is considered property of your bankruptcy estate and all of it may be used to satisfy your debts.
This means the answer to the question can one spouse file bankruptcy without affecting the other depends on the how many of assets are community property, and if the answer is many, your bankruptcy can have a significant impact on your spouse.
Texas Is a Community Property State
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Contact A Bankruptcy Lawyer Serving Los Angeles And Southern California
The bankruptcy process is difficult to navigate, especially when one or more family members may suffer harm. Its an option you want to consider from every angle and the Law Offices of Steers and Associates have an extensive background in California bankruptcy law to help you and your spouse find the best option. We desire to see clients and their families emerge from bankruptcy as soon as possible so they can get on with their lives.
When your family faces bankruptcy in Los Angeles or anywhere across Southern California please contact us as soon as possible. We offer a free and confidential consultation to anyone considering bankruptcy. Let us look over your situation as well as your spouses situation so we can determine your best path to financial freedom.
Does Filing For Bankruptcy In Canada Affect My Spouse
Home >>How to File Bankruptcy>> Does filing for bankruptcy affect my spouse?
Filing for bankruptcy in Canada does not directly affect your spouse. Your debts are your debts; only you are responsible for them. If you go bankrupt, your debts are discharged. Your husband or wife or common-law spouse is NOT responsible for your debts.
Many people believe that because you are married, your spouse is automatically responsible for your debts. This is not true. Often collection agents, when they are trying to collect from you, tell you that if you dont pay they will get the money from your spouse. This is a collection agency scare tactic; they can only go after you for your debts.
The only exception is if your spouse has co-signed or guaranteed your debt. For example, if you took out a loan and your spouse co-signed for it, it is also legally their loan. If you both have a credit card on the same account, the credit card debt legally belongs to both of you.
Remember, your spouse is liable for the debt, not because they are your spouse, but because they have signed for the debt.
There may be an indirect impact on your spouse in the future if you try to obtain financing jointly As you rebuild your credit, you might not be eligible to co-sign a loan or obtain credit. Or, you may be subject to higher interest rates. This may affect your spouse if you jointly wish to apply for credit in your future.
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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:
Can One Spouse File Bankruptcy
Whether your creditors will go after your spouse when you declare personal bankruptcy will depend on who owns the debt.
Filing bankruptcy in Canada will not directly affect your spouse because your debts are your debts and only you are responsible for your debts.
Therefore, yes only one spouse can file bankruptcy and it will not impact the other spouse or the other spouses credit rating.
Need Help Reviewing Your Financial Situation?Contact a Licensed Trustee for a Free Debt Relief Evaluation
It is commonly believed that both spouses are responsible for debt when they are married because collection agencies will threaten to collect from a spouse when calling about collecting on a debt.
A collection agency will never be able to collect from your spouse because they are not responsible for your debt if they have not co-signed on the debt.
However, if a spouse has co-signed for your debt / guaranteed the debt then your husband or wife will be responsible for the loan and must pay the loan off if you declare bankruptcy.
If your husband or wife co-signs a loan or you have a credit card on the same account then the debt is legally owned by both spouses.
In this case your spouse is only responsible for your debt because they signed for the debt.
Your bankruptcy might indirectly impact your spouse in certain ways in the future such as if you would like to co-sign a loan together.
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What Are The Advantages Of A Spouse Filing Individually
If you are married, you may file for bankruptcy individually and your spouse does not have to file.; This may be the best option in certain situations.; For one thing, because Ohio is a common-law state, not a community-property state, when you file individually, only property held by you or jointly by both spouses can be sold to pay creditors. ;Property held by your spouse alone will not be affected.
Here are some other advantages of having just one spouse file independently:
- One spouse has already filed bankruptcy in the past 8 years.
- One spouse has all the debt and the other has none, or one spouse has debts that are not dischargeable.
- One spouse owns assets free and clear and doesnt want to lose them.
- One spouse has a clean credit record and doesnt want that damaged, and that spouse has not cosigned on the filing spouses debts.