Married and Filing Separate in Bankruptcy, Part 3 of 3Posted by William on Mar 24, 2011 in Bankruptcy, Consumer Debt, Debt Collections Defense, News | 0 comments
Whether or not you should file a joint petition with your spouse or a single petition on your own depends on a variety of factors including the type of debts you owe, type of property you and your spouse own, whether or not the property you and your spouse own will be characterized as community property or separate property, and the amount of joint debt you and your spouse owe.
Filing a single petition without including your spouse may be beneficial to you and your family in several instances. First, if you and your spouse currently own no assets, then the fact that community property will be used to satisfy the filing party’s debt is of little consequence to you. You and your spouse essentially own no community property. In addition, a single petition may be beneficial to you where only one spouse is liable for the debt, i.e. only the husband signed off on the house mortgage and credit card applications. In instances where the debt is owed by only one spouse, you may be better off having that spouse file a single bankruptcy petition. Similarly, where only one individual is on the title to the family home and you and your spouse are contemplating filing for bankruptcy to stop a foreclosure, only the spouse who is actually on the title to the home needs to file for bankruptcy.
However, it is important to remember that any suspicious property transfers between you and your spouse will be reviewed by the bankruptcy court. A transfer between the filing spouse and non-filing spouse can be deemed a fraudulent transfer, and the bankruptcy trustee may require you to surrender the property and allow it to be sold to pay off certain creditors of the filing spouse.
Although bankruptcy filings have risen steadily in recent years, you and your spouse may find that it is more beneficial to you both if only one spouse goes through the bankruptcy process. In many cases, if you and your spouse have no joint liabilities, then only the individual liable for the debt needs to file. Only the individual liable needs to obtain all of his financial records, meet with an attorney, and take the necessary credit counseling classes.
Similarly, only the individual liable for the debt should see any impact on their credit score. A bankruptcy should not show in the non-filing spouse’s credit report. The filing spouse’s bankruptcy discharge should only show on the non-filing spouse’s credit report if the spouses had joint debt. Credit worthiness is supposed to be calculated on an individual basis, and married couples are not supposed to share a credit score. As such, the filing spouse’s bankruptcy discharge should only affect the credit worthiness of the non-filing spouse if both spouses apply jointly in the future for a loan. Don’t forget that lenders consider the credit worthiness of both applicants when making a decision as to whether or not to extend a loan offer.
If you or your spouse are considering filing for bankruptcy, call a Los Angeles Bankruptcy Attorney today. Our Los Angeles Bankruptcy Attorney can help you and your spouse make the best possible financial decision for you and your family.