Transfers Can Be Reversed
Large item transfers, such as a car, a house, a sizeable financial account, or any other significant property, are at risk of being reversed in a bankruptcy case by a judge. This is because when transfers like this occur, judges know that it is done to avoid the property being taken by creditors. Transfers made right before you file for bankruptcy will seem particularly suspicious, but even transfers made 2 to 4 years previously still have a high chance of being reversed.
Most people do not plan to file for bankruptcy years in advance. However, on the off chance that you do think it might be something youll have to do, you can transfer the property four years or more ahead of time, and it may reduce the likelihood of a reversal. In the rare case where a judge still attempts to reverse a transfer made four or more years previously, it may be necessary to work with an attorney to fight the reversal of the property. Even before you make a transfer, speaking with an attorney is wise. These situations are very complex, and you can easily lose your property entirely if you are not careful.
If My Spouse Files For Bankruptcy Do I Need To As Well
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.
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What To Do Next
Its always wise to consult with a bankruptcy attorney before filing. Lawyers have experience and understand the nuances of the rules and laws.
Consider the inheritance that may be coming to your spouse. Do you understand the rules regarding said money? An exemption could be filed for the inheritance, but only up to a certain amount. If you become eligible for an inheritance with six months of fling, that money could become part of the bankruptcy estate. If it sounds overwhelming, it might be. And it explains the importance of consulting and considering an attorney.
Remember that the first meeting typically is free use that to your advantage to gain some insight and understanding. A nonprofit credit counselor who can assess your financial situation may even be able to help before filing as well. Take advantage of any and all help.
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Can One Spouse File Bankruptcy
Does a married couple have to file bankruptcy together, or can just one spouse file bankruptcy? Whether due to wanting to protect a loved one from stress and anxiety, embarrassment from bankruptcy when married, or financial strategizing, there a host of reasons why a spouse may wish to file bankruptcy independently of their husband or wife.
We discuss the possibilities and best courses of action for claiming bankruptcy when married and answer if you can file bankruptcy separately from your spouse, in the following article. Reach out to our Houston bankruptcy lawyers today for more guidance on your specific case.
Filing For Bankruptcy During Divorce
Whether you file bankruptcy before or after your divorce is finalized affects whether your creditors will be entitled to any assets that may be part of our divorce agreement.
If you file bankruptcy before your divorce is final, your assets transfer to your bankruptcy estate and are no longer available for distribution in a divorce.
Alternately, if you finalize your divorce before bankruptcy and assets are transferred to an ex-spouse as part of a Family Court Order or legal separation agreement before you file for bankruptcy then these assets are no longer available for your creditors in the bankruptcy.
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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.
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 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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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:
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If you are considering bankruptcy and married, you are likely prepared to have to file bankruptcy as a couple. This is the case for many legal issues once you tie the knot, but bankruptcy can be the exception. If you are married, you can still technically file for bankruptcy independently of your spouse, but you may not want to.
While you cannot file jointly, both spouses can file bankruptcy at the same time via two different bankruptcy cases that covers their family finances as a whole. Whether or not to file bankruptcy on your own or with your spouse all depends on who owns the majority of the debt and what would be the most beneficial for your family.
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What If We Want To Apply For Joint Loans Or Credit Accounts Together In The Future
You and your spouse will still be able to apply for joint loans or credit accounts in the future. For a while, your bankruptcy filing may impact your ability to get a joint loan with good terms. But, most people with poor credit who file for bankruptcy see their when compared to people with poor credit who remain in debt. So, as you rebuild your credit score, you’re ability to get favorable terms on new loans will increase as well.
What Happens To Our Property When I File For Bankruptcy
Before we jump specifically into what happens when you transfer property, lets first clarify the ways that property can be affected. In most situations, your bankruptcy will not affect property that is owned separately by your spouse. However, anything jointly owned is not necessarily safe, and how it is treated will depend on whether you live in a common-law or community property state.
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How Will Bankruptcy Affect My Non
When a married person is considering filing bankruptcy alone, a common concern is how the bankruptcy filing will affect their spouse. The good news is, when one spouse files bankruptcy, it generally does not have too much of an effect on a non-filing spouse. However, there are a few things that both spouses should be aware of.
How Sawin & Shea Llc Can Help
Filing for bankruptcy is a stressful and challenging process. We understand how devastating losing property to creditors can be in these cases. At Sawin & Shea, we believe in providing compassionate and understanding representation to all of our clients and are determined to help you achieve the best possible outcome. Our attorneys specialize in bankruptcy cases and are here to help you through the process every step of the way.
Contact us at 317-759-1483 or send us an email for a free consultation today!
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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.
Risks Of Consolidating Debt After Marriage
Its not unheard of for spouses to consolidate their debt once they are married. A common strategy is obtaining a joint consolidation loan to deal with problem debt more affordably, especially if one spouse has a lower credit rating than the other. However, the risks to consolidating debt can outweigh the benefits. Once you become co-borrowers on a loan, you both will be legally obligated to repay the loan. Also, it is not possible to have a name taken off a joint loan without the lenders permission, and because the lender approved the loan based on a joint application, they may not be willing to do so. Should one spouse stop making payments due to marital breakdown, the lender will look to you for full payment, which can become a serious financial burden. For these reasons, it may be wiser to keep your personal debt obligations separate and deal with problem debt individually.
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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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How Does Bankruptcy Affect A Spouses Credit Rating
The bankruptcy of a spouse should not affect a non-bankrupt spouses credit rating. However, as the bankrupt spouse will be listed at their non-bankrupt spouses address, it often has an effect on both parties ability to gain credit.
If couples have joint assets I would always recommend taking some professional advice before agreeing to a final settlement with a Trustee in Bankruptcy. It is a complex area of the law and it is important to make sure the agreed settlement is fair to all parties.
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Talk To A Licensed Debt Expert
We help families solve their financial crisis every day. Almost 4 in 10 people we help are married. Contact our professional, caring team for a free, no obligation consultation. One of our trustees will personally review your financial situation and explain all your debt relief options and what impact, if any, this would have on your spouse.
We can help you to regain control of your family finances, simply contact us today.
How To Reduce A Nonfiling Spouses Income In Bankruptcy
Although you must include your nonfiling spouses 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 spouses personal expenses if theyre paid with her own separate income. You can exclude that portion because it isnt used to support your household.
For more information on how this works, read The Marital Adjustment Deduction on the Means Test.
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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.
Spouses With Separate Households
You do not need to include your spouses income in the bankruptcy filing if you and your partner maintain separate households. Some couples support separate households. Sometimes couples have jobs in different locations. Other times, a separate residence is needed to ease marital tensions. Whatever the reason, if your marriage or partnership includes separate households, you do not need to include your spouses income when filing.
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What Is Community Property And How Does It Affect Bankruptcy
Texas is a community property state. In a community property state, any joint property owned by both spouses may be a part of the bankruptcy estate, even if only one spouse is filing the claim. In this case, one spouse filing for bankruptcy can affect the other spouse in that the spouse may lose that property.
So while one spouse can file for bankruptcy without it going on the others credit report, it cans still affect the other spouses property. The spouse filing for bankruptcy should speak with an attorney about options available to protect property when filing, such as Texas bankruptcy exemptions or federal exemptions. If all joint property is protected by bankruptcy exemptions, this might not affect the other spouse who is not filing for bankruptcy.