How Does Filing Bankruptcy Affect Your Spouse?
When making drastic life decisions, it is important to take into consideration how such actions may impact our family. It has become a common occurrence that when an individual considers filing bankruptcy to deal with overwhelming debt, he or she is often discouraged by the implications that a bankruptcy filing may have on his or her spouse. One of the most common concerns that married bankruptcy filers have is the affect that a bankruptcy filing will have on their spouses’ credit report. Others are worried about their spouse losing his or her job, or are under the impression that both partners are obligated to file bankruptcy.
Will filing bankruptcy ruin my spouse’s credit?
Individuals who file bankruptcy are often worried about the impact that bankruptcy filing will have on their spouses’ credit report. It is important to note that each person, married or single, has a separate file at the credit bureau, which is tracked by his or her social security number. This means that as long as the spouse is not a co-debtor (“one of two or more debtors legally liable for the same debt,”) eliminating debt by filing bankruptcy will not affect the credit score of your spouse.
If your spouse is also responsible for a debt that your attempting to discharge in bankruptcy then your spouse has a bigger issue than a negative report on their credit. When one spouse files for bankruptcy under Chapter 7 bankruptcy on a joint debt, the creditor may immediately take action against the non-filing spouse. Chapter 13 has a safeguard against this called the co-debtor stay that in many situations will protect a co-debtor even when they are not filing for bankruptcy. An experienced bankruptcy attorney can advise you accordingly.
If I file for bankruptcy, does that mean my spouse has to file too?
One of the common misconceptions of filing bankruptcy if you are married is that if one member of the marriage files bankruptcy, the other is obligated to file as well. In the event that both spouses owe money to the same creditor, it may make sense to file jointly for a Chapter 7 bankruptcy. A joint filing is not be necessary either in Chapter 13 bankruptcy, or for cases in which only one spouse is liable for all of the debt, particularly for debt incurred before the marriage; it may make more sense for only the debtor to file bankruptcy.
It is important to note that although debts are on only one spouse’s name, assets may not be. It is recommended to consult with an experienced bankruptcy attorney to determine whether a joint or single bankruptcy filing is the best course of action for you.
If I File Bankruptcy, Will My Spouse And I Lose Our Jobs?
Bankruptcy laws strictly prohibits an employer to fire either you or your spouse simply because you filed bankruptcy. In most cases, your employer may not even be aware that you filed bankruptcy. If your employer does find out that you filed bankruptcy, he or she might be relieved that you taking control of your financial situation. In the unfortunate event that either you or your spouse were fired on the grounds that you filed bankruptcy, it is important to contact your bankruptcy attorney immediately.