Spouses Bankruptcy Filing In Arizona
It is possible for you to do the bankruptcy filing in Arizona without getting your spouse involved. When one individual files, the other one will not be entered into the bankruptcy proceedings automatically.
Still, there are certain potential negative consequences that the non-filing spouse may have to deal with.
The most common ramification is for the non-filing spouse to be left without any protection in the case of shared debt. A bankruptcy filing puts an automatic stay on debt collection efforts. When just one person is filing, however, the other one will not be entitled to such protections.
Only when both spouses file at the same time will the automatic stay come into effect to prevent debt collection efforts aimed at both.
In the case of individual filing, debt collection is also ceased against the marital community. Community property consists of everything acquired by the two individuals over the course of their marriage. All property and assets will be added to the bankruptcy estate. Non-exempt property will be liquidated in a Chapter 7 bankruptcy for the purpose of paying debt off.
The bankruptcy discharge obtained by one spouse in Arizona also protects the marital assets that were obtained before and after the bankruptcy. What does this mean? While the person who hasnt filed is technically still liable for mutual debt, the creditors cannot go for repossession or the foreclosure of mutual property. The wages of the two spouses are also being protected.
Bankruptcy And Getting Married: What Happens If I Bring Debt Into A Marriage
When you get married, you begin building what is called marital property. Marital property is distinct from your own personal property insofar as it is property that is owned by both you and your spouse. Prior assets and debts do not become marital property.
In short, if you file for bankruptcy before getting married your future spouse will NOT be affected. This is a common concern for a debtor to bring up during their consultation with an attorney. For some reason, many people are under the impression that a couple shares a credit score or there is a joint credit score.
For the most part, debts incurred by one party will be the responsibility of the person whose name is on the debt unless, your future spouse co-signed a loan for you. If you file bankruptcy and the debt included is owed by you only, then the process should not have an effect on your spouse-to-be. In many cases, as long as the debt is yours, meaning you are liable for outstanding amounts owed, you should get them discharged or eliminated with no problems.
The situation may be different if your future spouse co-signed a loan for you. In this case, if you file for protection the creditor could pursue your future spouse if they choose not to file bankruptcy. Unless your future spouse has the ability to repay what is outstanding on the loan, they may want to consider filing for protection as well.
What Can You Do To Avoid This
Although a joint debt cannot be eliminated by a divorce or separation agreement, there are options available for dealing with the joint debt a spouse may be responsible for when the other spouse files for bankruptcy:
the spouse left with the debt can file for bankruptcy
the spouse left with the debt can file a consumer proposal
both spouses can file a joint bankruptcy or joint consumer proposal
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The Bottom Line: You Are Responsible For Your Debts
The lesson to be learned from this post is simple: your debts are your debts only, and only you are responsible for them. This rule has big implications if youre preparing for bankruptcy because if you file without your spouse, your joint debt will become your spouses full responsibility.
In order to make the correct decision, make a list of the debts that are really holding you back. Are they primarily incurred in one spouses name? If so, it may be best for the heavily indebted spouse to file bankruptcy to preserve the others .
If, on the other hand, joint debts are your main problem, it will be necessary for both spouses to file in order to truly rid yourselves of debt.
How Will My Spouses Bankruptcy Filing Affect Me
If you are married, you have to think about the impact your decisions will have on your closest people. Bankruptcy is one such major decision that will definitely affect your spouse and your children. Many people in Arizona are not sure about the way in which a spouses bankruptcy filing is going to affect them. This is also one of the reasons why bankruptcy may be sought as a last-resort option many aspects of the procedure remain misunderstood.
In Arizona, either one person or both spouses can do the bankruptcy filing. Each of these decisions will have a specific impact on the entire household.
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Thinking About Bankruptcy Licata Bankruptcy Firm Can Help
Filing for bankruptcy is a hard decision to make, and when your spouse is involved, it can make it that much harder to decide. However, when debt is becoming unmanageable, you may feel hopeless and don’t know where to turn for help. Know that you are not alone, and our team of experienced bankruptcy lawyers is here to answer your questions and ease your concerns.
You and your spouse don’t have to live with crushing debt. At Licata Bankruptcy Firm, our mission is to help individuals, families, and businesses get the financial relief they need through bankruptcy. You deserve one-on-one personalized attention, and we are here to help you get through a difficult time and walk you through every step of the bankruptcy process.
To learn more about your options, contact our Springfield bankruptcy attorneys at 213-5006 today.
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.
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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.
There Are No Shared Credit Reports
Many people think that spouses share a single credit report. They dont. Instead, they may have accounts that are on both credit reports. Spouses who share credit cards, bank accounts, mortgages, and car loans will have these accounts on both of their credit reports. This does not, however, mean that there is only one credit report.
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Does My Business Bankruptcy Affect My Spouse’s Credit
Bankruptcy can have far-reaching effects on those who decide to go through the process. Whether a business bankruptcy will affect your spouses credit will depend on several factors, in particular, where you live.
The following states are community property states: Alaska, Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington, and Wisconsin. If you live in one of these states, any income or property that is earned or bought during the marriage is considered community property.
This also means that any debt that is incurred by one or both spouses during the marriage is also shared. If you have a business and are considering filing bankruptcy, it might make sense for both of you to file in order to wipe out the business debts and protect your community property and income.
All others are common law property states, and debts incurred by one spouse are generally the responsibility of that person only. However, there are caveats to common law property. Debts that may be jointly owned and are thus the responsibility of both spouses include:
- The names of both spouses appear on property titles or accounts
- Both spouses guaranteed payments to loans or other debts
- Both spouses entered their credit information for a loan and/or
- Debts that benefited the marriage, such as child care and groceries.
How Will The Bankruptcy Affect Both Of Your Credit Scores
Filing bankruptcy jointly with your spouse makes sense if you are both burdened by debt in both your names. If your spouse files but you dont, your jointly-held debt will become your responsibility.
However, if you file jointly, both of your credit scores will be adversely affected. This will hinder your ability to buy a home, car, or start a business for several years following discharge.
If you and your spouse plan on doing any of these things, you may need to consider filing alone. It may be better for the more indebted spouse to file so the other spouse retains a good credit score. The spouse who doesnt file can even help the other improve their credit score by co-signing on new debts and credit cards.
Thus, its important for both spouses to review their credit reports when considering whether to file bankruptcy alone or jointly. Its also vital that the spouse who does not file reviews their credit report regularly. They will need to ensure that the other spouses bankruptcy does not show up on it.
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What About Jointly Owned Property
Jointly held property is uniquely vulnerable to outstanding debts. Lets say you and your spouse have been paying on a mortgage. But one spouse has charged tens of thousands of dollars onto a personal credit card from online gambling sites. A creditor can, in this case, file suit against the spouse and place a lien on their share of the equity. This can create a problem for the other spouse when it comes time to sell the property. Additionally, they can begin garnishing wages or levying joint bank accounts on which the debtor spouse has his name.
Your share, however, remains safe, but the property itself is now title clouded with multiple individuals claiming at least a portion of the equity. Title clouded properties can be difficult to deal with.
If the property is real estate and not the home in which you reside, the creditor can force the sale of his share of the equity transferring the debt to someone else. There are those who purchase these kinds of liens for the interest or to acquire the property. They cannot, however, force the sale of a homestead property.
If they file for bankruptcy, however, they may be able to discharge that debt and prevent the lien from ever going into effect.
Will The Bankruptcy Affect Jointly
Another important consideration in deciding whether to file bankruptcy alone or jointly is the amount of debt in your spouses name. It is not the case that simply because you are married, you are liable for your spouses debts. You and your spouse are equally responsible for debts that are in both your names.
Any debts you owe in your own name are your own responsibility. Debts your spouse owes in their name alone are their responsibility. So, credit cards opened by your spouse before you were married contribute to your spouses debt, not yours. A mortgage you acquired jointly after you were married is debt that belongs to both of you.
If you and your spouse are mainly burdened by debts held jointly, filing together makes the most sense. This way, you both can eliminate the debt and gain a financial fresh start. If you file alone, your spouse could be pursued for these jointly-held debts.
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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.
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 skilled bankruptcy lawyer 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.
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Navigating Your Bankruptcy Case
Bankruptcy is an unusual area of law because it’s essentially a qualification process. The laws provide instructions for completing a 50- to 60-page bankruptcy petition, and because all rules apply in every case, you can’t skip a step.
The forms and resources below will help you find more information. Also, you can use this list of Chapter 7 and 13 bankruptcy forms to see where this topic falls. And this handy bankruptcy document checklist will help you gather the things you’ll need to complete the petition.
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Does Filing For Bankruptcy In Canada 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.
These issues are complicated. It is often difficult to determine if a credit card is a joint card, or just a supplementary card.
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