How Will My Spouse’s Bankruptcy Affect Me?

How Will my spouses Bankruptcy Affect me?

 How Will My Spouse’s Bankruptcy Affect Me?

One way to avoid the overwhelming anxiety and issues that come with having major debt is bankruptcy. Bankruptcy gives you a fresh financial start. For those who are married, you might worry what happens to you when your spouse declares bankruptcy. You don’t have to file with your spouse, but that doesn’t mean you won’t be affected. With Chapter 7 bankruptcy, assets held in your name might be sold so that creditors are satisfied. You might experience a negative impact on your credit score. This isn’t always the case though.

Will Their Bankruptcy Affect My Credit?

If your spouse files for bankruptcy without you, then this will likely not affect your credit. If you have any joint debt with your spouse, you might find that they filed on your credit report. You might also have creditors who will try to collect any joint debt you had with your spouse. You must also keep in mind that your spouse filing may impact your ability to get low-interest rates or loans. Lenders typically take into consideration both credit scores before giving a loan.


If you decide to cosign on debts with your spouse who is filing, then your credit could be negatively affected in this way. You also run the risk of the filing removing the requirement of the debt being paid but creditors still coming after you for the amount of the debt since you cosigned.

What Will Happen to Our Property in Bankruptcy?

A big part of whether you’ll be affected by your spouse is whether you have jointly owned assets and whether you live in a community or common law property state. This also applies to income, including compensation due one (or both of you) from pending backpay or worker compensation. The state you reside in directly impacts how this income is treated. Texas has very consumer-friendly laws, where as others states view this differently as noted by this Arizona Workers Compensation attorney.

Community Property States

States that are community property states include Wisconsin, Texas, Washington, Nevada, New Mexico, Louisiana, California, Idaho, and Arizona. In these states, all marital assets can be a part of the bankruptcy estate. This type of property is any property that is held by your spouse or you as well as property bought during your marriage. This means the property can be used to pay off your spouse’s debts even though it is in your name. There are specific exceptions that could apply. Things get even more challenging during divorce. This not only includes assets and liability, but also parenting orders, etc.

Common Law States

All other states that are not community property law states are common law states. In common law states, the only property that can be sold to pay creditors is property that is held jointly. This is also true when it comes to assets, or even personal injury settlements, according to this lawyer. If you hold property on your own, then you will likely not lose your assets. That being said, the court that presides over bankruptcy cases considers the total income and expenses of the household to determine if your spouse is eligible to file.

Can Creditors Come After My Spouse If I File for Bankruptcy?

When your spouse files for bankruptcy, it will only eliminate their liability for debts that are dismissed in their case. It does not affect the debt that you may have personally or jointly with your spouse. When your spouse is thinking of filing for bankruptcy, consider your debt and whether you’re okay with the possibility of creditors coming after you.

The bottom line? It’s best to consult an experienced bankruptcy attorney to decide what is best for you and your spouse’s situation. Judge Jed of Shaw Defense offers a free over the phone consultation to help you determine the best course of action for your debts.


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