just_wondering asked:
Wondering how bankruptcy works if you are married. Say if one has awful credit, and the other has really good credit. The one needs to file for bankruptcy. Will the bankruptcy affect the other spouse? Or can the one do it alone without affecting the spouse at all? Any info or sites to look at would be appreciated. THANKS!
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Since a bankruptcy can be filed by one spouse without the other, this is one of the most common bankruptcy questions. There are several aspects of the answer.
A bankruptcy filing by one spouse does not bring the other spouse into bankruptcy. Neither does the bankruptcy of a spouse give the non filing spouse the full protection of the automatic stay or the bankruptcy discharge.
Joint debts
If you and your spouse are jointly liable to a creditor, the bankruptcy of one spouse does not relieve the other of paying the debt. Upon a bankruptcy, the creditor may look to the other spouse for payment, unless the bankruptcy case is under Chapter 13. If the debt is a consumer debt to be paid 100% through the Chapter 13 plan, the co debtor is protected by the codebtor stay in §1301.
Generally, marriage alone doesn’t make both spouses personally liable for a debt. Liability on contracts such as home loans and credit cards arises by agreement between the creditor and the debtor. Only persons who signed the loan or credit application are liable for the debt.
A joint tax return, however, makes both spouses liable for the total of the tax due.
If you have joint debts, you can expect the bankruptcy to be noted in some way on the credit record of the non filing spouse. There is uncertainty in the law at the moment as to whether it is proper to mention the bankruptcy of one debtor on the credit report of a debtor who is not in bankruptcy.
It will because they look at BOTH incomes and now that the bankruptcy laws have become more strict, it is even harder to file for bankruptcy. you can try these sites:
Hope this helps
I would suggest you read the article “New Bankruptcy Law – Where’s The Consumer Protection?” you can view it at: