Claiming Bankruptcy in Florida
You already know how much the things you do affect your spouse when you are married. Even if you’ve created stronger-than-usual boundaries, it’s impossible to make any significant decisions or changes in your life without your spouse’s involvement. Some states even require your spouse to sign-off on certain decisions before they’ll consider it a legal decision.
Do these rules apply to bankruptcy? What happens when you file for bankruptcy without your spouse?
Every situation is different, so it’s important to work with an experienced attorney when you file for bankruptcy. However, there is a good chance that filing for bankruptcy will affect your spouse’s debts, ownership of property, and more.
Your bankruptcy is likely to affect your spouse less if you:
- Do not own any joint property
- Do not have any joint debts
- Live in a state that automatically recognizes the joint ownership of property for married couples
- File for Chapter 13, as opposed to Chapter 7
You can learn more about the differences between Chapter 13 and Chapter 7 here.
Your Spouse’s Credit
It’s no secret your credit score takes a hit when you file for bankruptcy. But will your spouse’s credit also be damaged if you file without them?
Usually, it won’t. However, if you have joint credit accounts and one or more of those accounts is discharged, that will show on your spouse’s credit report.
And because your spouse didn’t file for bankruptcy, he or she won’t receive the same protections you are granted when you file. This means the creditor is free to pursue your spouse for the unpaid debt even though you received a discharge.
Claiming Bankruptcy in Florida Affects Jointly Owned Property
As mentioned early, how the bankruptcy court handles the property of one spouse when the other files for bankruptcy depend on the state in which you live. In common law property states, your jointly-owned assets are part of the bankruptcy estate. If you sell this jointly owned, it might be possible for your spouse to recover their share of the value of the property. If your spouse owns additional property in their name alone it isn’t at risk.
On the other hand, in community property states, nearly all assets owned by either you or your spouse are part of the bankruptcy estate. These states view all property as equally owned by each spouse, regardless of the acquisition method. There are exceptions and there might still be ways to protect certain property, but you’ll need to speak to a bankruptcy attorney about your specific situation.
Can Creditors Collect on Debts from My Spouse after I’ve Filed for Bankruptcy?
The only thing eliminated when you file for bankruptcy is your liability for your dischargeable debts. Any obligation your spouse has to a shared debt remains. This means creditors are free to take debt collection actions against your spouse.
Determining whether to file for bankruptcy on your own or with your spouse when you are married is difficult. It might seem obvious what you should do, but without understanding the finer points of bankruptcy law, you could be putting yourself and your spouse at risk.