Bankruptcy FAQs - your questions answered right here...
More About Bankruptcy FAQs...
I'm married and filing bankruptcy. Will it affect my spouse? Should I file alone or should we file together? There's no doubt bankruptcy will affect both you and your spouse, but you're wondering about the financial and/or legal issues. There aren't any simple answers to these questions.
If you and your spouse file bankruptcy together, it involves both your individual debts and also your joint debts. That's the easiest case. It gets trickier when only one spouse files. If you do not live in a community property state, the non-filing spouse probably will not be affected if they did not sign for any of the debt.
If you both husband and wife sign an agreement or a contract for a debt, the spouse who doesn't file for bankruptcy will still be responsible for their share of the debt. If the non-filing spouse uses a supplemental credit card, they are likely responsible for debts charged on that card.
You may think it will be easy to figure out who is responsible for which debt. The normal rules that apply in a marital situation don't necessarily apply in bankruptcy. For example, the creditors of one spouse cannot usually repossess property that is owned by both husband and wife. In bankruptcy, the property might be turned over to the trustee and liquidated to repay debts.
You might even think that if only one of you files for bankruptcy, you can transfer the property you want to keep to the non-filing spouse. Think again! The bankruptcy court takes a dim view of this. If you give ownership of property to a spouse within a year of filing bankruptcy, it's considered a fraudulent transaction, and the property involved will be turned over to the bankruptcy trustee.
In the nine community property states (Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington, and Wisconsin) spouses equally own all property acquired during the marriage. If one spouse files bankruptcy, all the community property is part of the bankruptcy estate. The property of the non-filing spouse is not involved in the bankruptcy. The filing spouse's property is used first to settle debts, then the non-exempt community property is used.
It sounds complicated already, doesn't it? It becomes even more complicated when divorce gets mixed in with bankruptcy. A divorce court may assign the responsibility for a joint debt to one spouse. If that ex-spouse later files bankruptcy and the debt is discharged, the lender or credit card company will go after the other ex-spouse for payment.
You can reduce the complications of mixing bankruptcy and divorce by making sure your lawyer takes bankruptcy into account in preparing a separation agreement and drafting a divorce judgment.
While the information here is not legal advice, it does give you an idea of the problems that arise when community property is part of a bankruptcy filing. Your best option to sort it all out if you have to file bankruptcy is to get a good lawyer.
While the information here is not legal advice, it does give you an idea of the problems that arise when community property is part of a bankruptcy filing. Your best option to sort it all out if you have to file bankruptcy is to get a
good bankruptcy lawyer.
Contact |
Bookmark this page! |
Privacy |
SiteMap |
Bankruptcy Faqs (Home)
copyright ©2007 bankruptcystressrelief.com
bankruptcy faqs | FAQ bankruptcy | personal bankruptcy faq | bankruptcies faq
Webmasters: this website is hosted by
BlueHost, web hosting for professionals, around the world.
|
