Bankruptcy's effect on marriage
The social burden that comes about with bankruptcy can be very emotional and can crush your marital relationship. We have not even considered the legal implications that come about. From a legal point of view, the amount of liability your spouse is susceptible to involve those debts that are jointly held or have been guaranteed jointly. One partner filing for bankruptcy may turn complicated eventually and have a negative long-lasting impact on how you relate with your spouse in that marriage.
Dealing with bankruptcy situations when only one spouse is involved is really complicated. The proceedings too are quite technical and complicated as they have different applications depending on which state you are in. It’s advisable to employ the assistance of a legal attorney.
What are primary, supplementary and joint cards in Bankruptcy?
Supplementary credit cards are usually shared by spouses. The spouse who filed for bankruptcy is the primary cardholder. Usually, they will request for a supplementary card for their partner so that in the case that they fail to meet their statutory debt repayment obligations, the other partner is held legally liable. This is not the case if the consent of the spouse is not acquired.
Many debt collection agencies will seek remuneration from the supplementary cardholder in the case that the primary holder defaults on their payment. Before filing for bankruptcy, iron out all these issues and ascertain that your credit card has joint or supplementary co-borrowers. Where there are joint debts, both parties are liable.
Monetary issues are responsible for many separations every day. Partners will engage in a vicious cycle of blame game on who is responsible and how exactly their debt levels accumulated to such irreversible proportions.
Many divorce cases are riddled with bankruptcy situations. There is also a popular belief that divorcing your bankrupt partner can save you from debt. The assumption that debt is split in the same manner as matrimonial property is totally misguided.
Is my spouse protected when I file for bankruptcy?
What happens when one partner goes it alone? Debts, which are held jointly, as well as other outstanding liabilities are paid off to prevent any unnecessary lawsuits or future legal action. Just by filing for bankruptcy, there is no guarantee that your other partner will receive any form of special protection. Creditors also pursue the other partner whenever the primary holder defaults or fails to meet their financial obligation.
What are the concerns on property?
Depending on your state of residence, there are two forms of marital property ownership, as determined by the state laws. The first one is the equitable distribution while the other is communal property. In the former, the bankrupt partner’s estate/property is what they own individually as well as the portion of what they jointly own with the other spouse. In the latter case, all marital property here is equitably owned. Only the property of the non-filing partner, which was acquired before marriage will remain safe.
Divorce and Bankruptcy
Many couples still believe that a divorce saves their assets by splitting them in half or preventing them from liability altogether. All marriage partners have equal responsibility and should ensure that their debts are repaid fully way after divorce. A legal expert will reveal that filing for a divorce is not a way of avoiding implications of bankruptcy.
One thing that experts advise is that you should go through a bankruptcy first, and then the divorce will come later. That way, both partners can part ways amicably without the shadow of debts dogging them.
Surprisingly, even when there exists special situations such as legally separated agreements that boldly indicate that each spouse has to assume the debt on 50-50 basis; creditors can still chase after the latter partner if the former defaults. This makes such agreements baseless when push comes to shove. What many people fail to understand is that despite property being owned jointly, debt owed will have to be recovered one way or another. When the responsible party defaults or fails to pay back the creditors, the responsibility automatically is transferred to the other spouse.
Many fail to consider that they are divorcing their spouse and not the bank that granted them credit. Note that when you cosign on a jointly held debt/loan, it, in essence, makes you responsible for the entire debt. The banks, creditors and lenders will go to any lengths to retrieve their money until it is paid in full.
My name is Craig R. Chlarson. Whether you are seeking to eliminate your debt, typically through a chapter 7 filing, or whether you are seeking to reorganize your debt, typically through a chapter 13 filing, or even if you have basic bankruptcy questions, call me today. I can help you.
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