How Does Bankruptcy Effect My Spouse?
Often times we hear that only one spouse wants to file for San Diego bankruptcy protection. This is certainly allowed under the bankruptcy code, but there are several things you want to consider. First, if one spouse files for Chapter 7 or Chapter 13 bankruptcy, the other spouse is not brought in but the non-filing spouse will not have any of the benefits associated with bankruptcy including the automatic stay and discharge.
If a husband and wife carry a joint debt, then the husband filing for bankruptcy, for example, will not absolve the wife’s liability and vice versa. The San Diego creditor will most certainly look to the other spouse to satisfy the debt. The one exception is a Chapter 13 bankruptcy. If you file a Chapter 13 bankruptcy and the joint debt is covered 100% in the Chapter 13 plan, the non-filing debtor is protected.
It is the general rule that marriage, by itself, does not create joint liability between spouses. Let us take, for example, a San Diego home loan. Joint liability for that loan can only happen through the execution of a contract. Only the actual parties to the contract can be held liable.
If, on the other hand, you and your spouse decide to file your tax returns jointly, then you and your spouse are responsible for the entire tax debt. A San Diego bankruptcy attorney will tell you if both spouses should file for bankruptcy.
There is a conflict in the bankruptcy case law as to whether or not a bankruptcy by one spouse can be noted on the credit report of the non-filing spouse. We recommend that if you do choose to have only one spouse file for San Diego bankruptcy, the other spouse should keep a careful eye on his/her credit report. If the Chapter 7 or Chapter 13 filing is reported on the non-filing spouses credit report, that spouse should notify the credit reporting agency of the error.
At Thompson | Wedeking, we have helped thousands of individuals with San Diego foreclosure, debt relief and Chapter 7, Chapter 11 and Chapter 13 bankruptcy. Call our office TODAY at 619.615.0767.