How does going bankrupt affect my spouse?
Some couples may decide to file bankruptcy together. However, there are times in which only one spouse may have to file. This is usually the case when one spouse is in debt and the other really has nothing to do with it. It is especially important that one spouse not file bankruptcy if that spouse has protected assets and if there may be an inheritance on the horizon.
If that spouse would file bankruptcy, some of their assets would also be taken away and any inheritances received within the next seven years would be taken as well. This is because there are only a certain amount of assets allowed during a bankruptcy.
Fortunately, because spouses have separate credit files, only one spouse has to file and only that one spouse will have to face the brunt of the consequences. Even if the one filing bankruptcy benefits from the assets of the spouse not filing bankruptcy, those assets cannot be touched because they don't belong to the bankrupt.
However, it is sometimes feasible for a married couple to file bankruptcy together, especially if the debts of one spouse have affected the other. Many creditors find it necessary to go after one spouse for the other's debt. In other words, the creditors feel that both parties are responsible for the debt of one.
In the case of divorce where child support, alimony, and palimony are at stake, a judge will not discharge the debt of someone wanting to get out of family obligations. These obligations must be paid no matter what. Bankruptcy during divorce can become even more complicated, especially if there are no prenuptial agreements in place.
Either way, the spouse of the one filing bankruptcy is affected in many ways. Even if their assets are not touched, the creditors will continue to hassle that individual to pay the debt. Although they cannot contact the bankrupt, they may not hesitate to contact the spouse. Many file bankruptcy jointly just for this reason; they don't want to be harassed anymore, but that is only if they are willing to be placed under the thumb of the system for seven years. This means restrictions on vacations, especially when leaving the country. This also means only being allowed to have a certain amount in assets, which could result in losing inheritances and other types of earnings. This also has a severe impact on employment, which is probably the scariest part of the entire ordeal.
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