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How will my Bankruptcy affect my Spouse?

Filing for bankruptcy is a big decision and it can have an impact, and if you are married you might be worried about the impact it could also have on your spouse.  That is very common and the most general answer is that 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.

However, there are different situations that could have a different effect. If you have a joint debt with a spouse and that spouse decides to file for bankruptcy you are going to be unwillingly dragged into the mess. Just because your spouse has discharged his debts doesn’t mean that the debt disappears.  When you decided to become jointly liable for the debt you made a commitment to act as a liable party that can be held responsible for the debt.

When your spouse files for bankruptcy the creditors will no longer be legally allowed to attempt to collect the debt from your spouse.  However they can still try to collect from debt if you are a co-signer but not included in the bankruptcy. This can have a negative impact on your credit report.  However, if you were not a co-signer for a debt then that debt will not appear on your credit report if it was not a joint debt.  This also means that the bankruptcy will only appear on the other spouses’ credit report.

If a non-filing spouse receives and adverse rating on their credit score as a result of their spouse’s bankruptcy, the matter should be addressed immediately with the credit reporting agencies.  A non-filing spouse should not have their credit damaged as a result of their husband or wife filing for bankruptcy.  However, it is important to remember that if you are filing for bankruptcy and include a debt that was obtained as a joint debt between the spouses and it is discharged, then that will mean that the other spouse is now fully responsible for the debt.

That means that the other spouse will also have to file for bankruptcy if they want to clear themselves of that debt.  Another issue for couples to consider when evaluating bankruptcy is what assets are under whose name.  If one spouse owns property in their name only, and doesn’t file bankruptcy, it won’t become part of the bankruptcy estate.

If you have concerns about bankruptcy and your spouse, please call us at 770-609-1247 to discuss your case with one of our experienced bankruptcy attorneys.

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