One of the more common questions received by the bankruptcy lawyers is, ” How filing for bankruptcy will affect my spouse?” This question comes up frequently when just one of the spouses is planning to file for bankruptcy. Several people have a wrong impression that if they are married the spouse will also be responsible for the debt. However, in reality, this is not the case. Both the spouses will be on the hook only in case the debt was incurred in both the partners’ names.
How my bankruptcy will impact my spouse?
When a husband files for bankruptcy without the spouse, only the husband’s debts are discharged. Sometimes the debts are held jointly. In such cases, the non-filed spouse or the wife will continue to owe after the husband has filed for bankruptcy. This bankruptcy will appear in the credit report of the husband however, it must not appear in the credit report of the wife. In case the non-filing spouse gets an adverse rating for some reason, on their credit score due to the spouse’s bankruptcy, this matter needs to be addressed immediately with the credit reporting agencies. The non-filing spouse must not get their credit damaged if the other spouse files for bankruptcy.
Consider the spouse’s assets while filing for a bankruptcy
Apart from the debt, there is another problem the married couples need to face while evaluating the bankruptcies. This is how the assets of the spouse will be considered. In case one of the spouses has a property in her name and has not filed for bankruptcy, it will not be a part of the bankruptcy estates. It is an important factor and depends on the asset value as chapter 7 bankruptcy is technically nothing but liquidation. All the properties you own that exceed the value of the exemption laws of your state are subject to liquidation from the trustees of bankruptcy. But the trustees have jurisdiction only over the party that is filing for bankruptcy. For instance, if a wife has a property only in her name, it will not be the bankruptcy estate of the husband.
A married couple may file for bankruptcy together
When the married couples are both filing for bankruptcy, there is a joint petition where a single case is filed in the name of both parties. This will keep the bankruptcy costs down by allowing the married debtors to file for one case and with a single fee. You might be filing for bankruptcy separately or together, one of the immediate advantages you can notice is an automatic stay. It means creditors will discontinue calling and a foreclosure is not imminent and all the wage garnishment has to end. This is certain to lift a lot of stress away from your family. Even when the bankruptcy is not affecting the spouse financially, it can cause emotional turmoil.
You are responsible for your debts
The lesson to learn from all this is pretty straightforward. Your debts are yours only and you are the person responsible for them. This rule can have serious implications when you are planning for bankruptcy. If you file for a chapter 7 without the spouse, your joint debt becomes the full responsibility of your spouse. For making a correct decision, you need to make a list of all the debts that are holding you back. Have the debts been incurred in the name of one spouse? If that is the case, it might be a good idea for the heavily indebted spouse to file for bankruptcy and preserve the better credit score of the other spouse. On the other hand, if the joint debts are the main issue, it is a good idea for both spouses to file for bankruptcy and get rid of the debts.
If you live in Tampa, FL area, you can get in touch with Weller Legal Group Tampa for help. They have resources and can get you started on the path of getting you through the bankruptcy proceedings. Although it can appear to be a difficult thing and even unbearable at times, bankruptcy can be good for you. Just select the right representation for navigating through the complexities of the bankruptcy case.
Picture Credit: Freepik