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For many married couples, one spouse may have debts that the other does not. With many people marrying later in life you may come into a marriage with credit card debts, auto loans, student loans and maybe even a mortgage. For still others, there may be separate and joint credit card accounts and other debts that are a blend. What we see with our clients is that everyone’s debt situation is unique. Usually couples come to us together to ask if just one or both should file for bankruptcy relief. But sometimes one spouse wants to file and the other doesn’t want it to happen.
Unfortunately if your spouse decides to file bankruptcy, there is nothing legally you can do to stop them. Usually when couples are in a functional marriage that’s a true partnership, this doesn’t happen. But sometimes we do see this happen when a marriage is breaking up and one spouse either doesn’t care about what happens to their partner’s finances as a result of their filing or is doing it to hurt the other person. Here’s a look at what can happen as a result.
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What Happens to Joint Debt When Your Spouse Files Bankruptcy?
If you and your spouse share debts such as credit card accounts or a mortgage, only one spouse filing bankruptcy can leave the other holding the bag. Unsecured debts such as credit cards are completely wiped out in a chapter 7 bankruptcy for the filer but only for the filer. So if you owe $15,000 on joint credit card or other unsecured debt accounts and your spouse files chapter 7, just their name will be removed from the accounts and the debt essentially becomes yours to deal with alone. Understand that they don’t get away scot free – their credit score will take a hit because of the filing, but that won’t help you when the debts come due each month.
What Happens to Your Credit Score When Your Spouse Files Bankruptcy?
Once your spouse files bankruptcy, one of the good things is that it will not be reflected on your credit report at all. What can affect your credit report though is if your spouse leaves you with debt you can’t pay on your own and they aren’t helping you deal with the debts that are now in your name only. If you miss payments or fall behind, this is what can impact your credit rating. As long as you can service the debts you’re left with, you can avoid any negative consequences to your credit rating from your spouse’s bankruptcy filing.
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What Else Do You Need to Know?
It’s important to know that there are two sides of joint debt you should understand. When it comes to bankruptcy, you cannot stop your spouse from filing bankruptcy at any time (so long as they qualify). If you are left with debts that you don’t feel you should have to shoulder alone because your spouse filed bankruptcy without you, you may be able to find some recourse through the divorce court. They won’t be able to reinstate any debts in your spouse’s name, but you may be awarded monies to help compensate for the debt burden left to you. What may be more practical is for you to also file bankruptcy (if you qualify) to extinguish your share of the debt, even if that’s not a debt relief alternative you had ever planned to pursue.
If your spouse is considering filing bankruptcy and you want to find out your options and what’s best for your specific circumstances, contact a reputable North Carolina bankruptcy attorney to discuss your debt dilemma and how it will be affected by your spouse filing solo bankruptcy. Call the law offices of John T Orcutt for a free consultation on your debt situation.