Does a Married Couple Have to File Joint Bankruptcy?
If you are having debt problems, you probably assume that your husband or wife or automatically responsible for any financial obligations in your name.
You may be surprised to learn that this is not the case in most situations.
Unless your spouse cosigned for the debt, your husband or wife would not be responsible depending on where you live.
In most states, you are not responsible for your spouse's debt obligations unless you cosign a loan or a credit card.
However, some states have different laws, so you may be responsible for financial obligations belonging to your husband or wife.
There are nine states known as community property states.
These include Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington, and Wisconsin.
If you live in one of these states, the above rules do not apply.
In community property states, all of the community property (which is the property and income obtained by either spouse during the marriage) is vulnerable to creditors.
There are some exceptions, such as gifts and inheritances.
Nevertheless, consumers who live in one of these states should understand that both spouses may be responsible.
Some of the other things you need to keep in mind if you're considering filing for bankruptcy, whether knowingly or singly, is what kind of bankruptcy you should file.
Chapter 7 bankruptcy is known as straight bankruptcy or liquidation because it attempts to eliminate recounts while selling off any nonexempt assets that you own.
Chapter 13, on the other hand, establishes a payment plan for several years after which the remaining balances on your debts are wiped out.
One of the advantages of Chapter 13 is that it allows you to catch up on payments, which is especially useful when you're behind on your mortgage payments.
You may be surprised to learn that this is not the case in most situations.
Unless your spouse cosigned for the debt, your husband or wife would not be responsible depending on where you live.
In most states, you are not responsible for your spouse's debt obligations unless you cosign a loan or a credit card.
However, some states have different laws, so you may be responsible for financial obligations belonging to your husband or wife.
There are nine states known as community property states.
These include Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington, and Wisconsin.
If you live in one of these states, the above rules do not apply.
In community property states, all of the community property (which is the property and income obtained by either spouse during the marriage) is vulnerable to creditors.
There are some exceptions, such as gifts and inheritances.
Nevertheless, consumers who live in one of these states should understand that both spouses may be responsible.
Some of the other things you need to keep in mind if you're considering filing for bankruptcy, whether knowingly or singly, is what kind of bankruptcy you should file.
Chapter 7 bankruptcy is known as straight bankruptcy or liquidation because it attempts to eliminate recounts while selling off any nonexempt assets that you own.
Chapter 13, on the other hand, establishes a payment plan for several years after which the remaining balances on your debts are wiped out.
One of the advantages of Chapter 13 is that it allows you to catch up on payments, which is especially useful when you're behind on your mortgage payments.
