Bankruptcy may impact your spouse, even if you file alone

You want to file bankruptcy alone, without your spouse, hoping to shield him or her from the impact as much as possible.

Your debt may still impact your spouse. For one thing, if you have a joint credit card — and many couples do — then the creditors may be able to get your spouse to pay. You both agreed to pay off that debt at the beginning. Just because you claim that you cannot pay does not mean your spouse cannot do so.

Even if the card is in your name alone, creditors may contend that your spouse benefited from the things you put on the card. Perhaps you used it to pay for utilities, buy groceries and go on vacations. Your spouse clearly benefited by living in the home, eating the food and going on those trips with you.

There is another potential issue if you use Chapter 7, which is liquidation bankruptcy. You have to sell off assets you own that are not exempt, and then you pay that money to your creditors. You and your spouse may share those assets, but he or she is also losing them if they get liquidated.

When you are married, bankruptcy is something that you and your spouse will experience together. Just like your monthly earnings or any debt you take on, it impacts both of you. It is impossible to completely keep your spouse out of it, no matter how badly you want to do so. Make sure that you both understand exactly what legal steps you’ll need to take.

Source: Credit Cards, “You can’t hide a bankruptcy from your spouse,” Sally Herigstad, accessed June 07, 2018