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FAQ'S

Saturday, September 10th, 2005

by Theodore Sliwinski, Esq.

Covered in this Article:

• Can a debtor file by himself even if he is married?
• Does my spouse and I have to file a joint bankruptcy?
• My spouse has a lot of debts but I do not have much. Will my spouse’s bankruptcy damage my credit score?
• Under what conditions should a husband and wife both file under chapter 7?
• What happens if one spouse files for bankruptcy and not the other?
• Does a divorce judgment protect a person from creditors if his ex-spouse files for bankruptcy?

1. Can a debtor file by themselves even if he is married?

Yes, but your spouse will still be liable for any joint debts. If you file together you will be able to double your exemptions. In some cases where only one spouse has debts, or one spouse has debts that are not dischargeable then it might be advisable to have only one spouse file. If the spouses both have joint debts, then the fact that one spouse has discharged the debt may appear on the other spouses credit report.

2. Does my spouse and I have to file a joint bankruptcy case?

No! The decision to file individually or together depends on your situation. For instance If only one partner owns all or most of the debt then only that person should file. If both partners owe the debt, and want to file a Chapter 7 then both should file. If you are trying to stop a foreclosure, only one person, on the title to the home, needs file a chapter 13.

3. If only my spouse files, what debts am I liable for, and what will happen to my credit?

As long as there was no joint debt, your credit will not be affected. However, any future join credit purchases will depend upon the member with the worst credit history. On the other hand, if there was joint debt and only one member filed, then the member who did not file will be help responsible for the entire debt.

4. My spouse has massive credit card debts, and I have a relatively a small amount of debt. Will my spouse’s bankruptcy damage my credit score?

Every bankruptcy case is different. In most cases if a person files for bankruptcy, then it should not significantly affect their spouse’s credit score. However, in some cases it does damage the non-filing spouses’ credit. The reason for this is because there is no accounting for credit bureau error. Errors of this type are far more common with a father and son with the same name. Spouses almost never have the same name and never have the same social security number. Credit bureau’s usually go by these numbers to keep errors to a minimum.

In short, I would not overly be concerned if your spouse files and you do not. However, keep in mind that some time down the road, both spouses may be applying for a mortgage or car loan together. If one spouse has a bankruptcy on their credit report, the interest rate on the car or home loan is going to be much higher. This may just be marital test, and it may make the marriage stronger.

All debtors also must keep in mind that if your spouse files and you are a co-debtor, then the creditor will absolutely look to you, the non-filing spouse, for payment! The creditor will sue the spouse who did not file bankruptcy. Quite often the non-filing spouse may be responsible for bills that they never had any idea that they owed.

5. Under what conditions should a husband and wife both file under Chapter 7?

Both husband and wife should file a joint petition if some of the debts to be discharged are owed by both spouses. If both spouses are liable for some of the debts and if only one spouse files Chapter 7, the creditors often try to coerce the non filing spouse into paying the debts, even if he or she has no income or assets.

6. I was recently informed by the bankruptcy court that my ex-husband is filing for chapter 7. I am one of his creditors because: a) he owes back child support — including past medical bills from our children, b) he’s obviously not paying current child support and other obligations regarding our children, and c) the divorce judgment requires him to pay me monies over time as part of the equitable distribution terms. Can my former spouse wipe me out in the bankruptcy?

Back child support can never be discharged in bankruptcy. This includes other debts, such as medical bills that are “in the nature of support.”

Arrears on current child support and debts for the children “in the nature of support” can never be discharged in bankruptcy.

Any terms of the judgment of divorce can be discharged only under certain circumstances. The non-bankrupt spouse must file an objection with the court that objects to the discharge of any of the “debts” that are related to the divorce judgment.

Any debts related to the divorce judgment, that are not child support related, can and will be discharged unless you object — formally, by filing papers at the bankruptcy court. The court will then decide if the benefit to your ex outweighs the determent to you. If so, he will be allowed to discharge the debt.

In summary, it is very common for ex-spouses to try to file bankruptcy, and to try to wipe out their former spouses. The bankrupt spouse can’t wipe out back child support, or wipe out current child support. However, the bankrupt spouse can then try to wipe out debts to their former spouse, if they are not related to child support. Basically, this type of litigation is called an adversary case. Thereafter, a court will analyze all of the circumstances of the case, and determine whether to discharge the bankrupt spouse’s debts to their spouse.

7. What happens if one spouse files for bankruptcy and not the other?

If one spouse files and the other does not, then the spouse who does not file could possibly be responsible for the debts. Check this out carefully before filing. This type of situation often occurs in a divorce case. After the divorce, one spouse files for bankruptcy. Thereafter, the creditor goes after the spouse who did not file bankruptcy. This is a favorite tactic that a spurned spouse will do to extract revenge.

8. Does a divorce judgment protect a person from creditors if his ex-spouse files for bankruptcy?

No. If you are a co-signor with your ex-spouse on a debt, the creditor can require the entire payment of that debt from you even though the divorce decree assigns the debt to your ex-spouse. Your divorce judgment may address any recourse you may have against your ex-spouse should he or she default on the loan obligations set out.