Can I File For Bankruptcy Separately From My Spouse?
Married individuals have the option of either filing a bankruptcy case with both spouses together or filing an individual case.
Can I Possibly Be Tied To My Ex-Spouse’s Bankruptcy?
Spouses can be indirectly connected when just one spouse files for bankruptcy. Even when one spouse files for bankruptcy, both spouses’ income has to be disclosed in the bankruptcy financial forms. The means test and other financial disclosures in bankruptcy are based on household income and not just the filer’s income. The second connection between a filing spouse and a non-filing spouse is that if both spouses are responsible for a given debt, then just because one spouse has filed for bankruptcy does not excuse the non-filing spouse from the obligation. However, in spite of these connections, the non-filing spouse should not be impacted on their credit report or their individual obligations.
Are There Benefits To Filing For Divorce Before Filing For Bankruptcy And Vice Versa?
There is significant interplay between divorce and bankruptcy, because spouses usually have a joint obligation on a number of debts. It will be an individual analysis, based on the personal circumstances of the person considering filing. Some debts that arise from separation, such as alimony and child support, are non-dischargeable, however, other debts, such as equitable distribution can be dischargeable in some circumstances. It is encouraged to consult with both divorce counsel and bankruptcy counsel to evaluate the individual circumstances, in terms of bankruptcy timing.
What Happens If Someone Files For A Bankruptcy In The Middle Of A Divorce?
In most instances, divorce actions are not subject to the automatic stay which often comes out of bankruptcy filings. However, there can be circumstances where the automatic stay may impact the proceedings in a divorce. Depending on the circumstances, the bankruptcy could temporarily forestall progress in the divorce action.
What Can I Do To Protect Myself If My Spouse Files For Bankruptcy?
If a spouse files for bankruptcy, the non-filing spouse should consult with bankruptcy counsel to see if there is any impact. While often there may not be any impact at all, in some circumstances, a filing spouse’s bankruptcy may prohibit a non-filer from proceeding with collection activity or undertaking other actions on the way to separation. There also may be impact if the non-filing spouse remains obligated on loans that the filing spouse has discharged. It is important to be mindful that even if an order in the divorce action requires one spouse to make the payments on a particular set of debts, the divorce order does not change the contractual obligations between the lender and the borrower. Even if one spouse is ordered to make all the payments in a given set of debts, the creditor could sue the other spouse, if they were signed as the borrower on the loan or credit card.
I Have A Lot Of Debt. Should I File For Bankruptcy Now Or Wait Until I Get Married?
Many clients find it desirable to start a new marriage with a clean bill of health from their debt. Marriage does not, by itself, create co-liability on existing loans, but it may make for more cohesive financial arrangements if both partners are entering into a marital relationship with balance on their debt obligations.
For more information on Bankruptcy & Marital Issues In Florida, a free initial consultation is your next best step. Get the information and legal answers you are seeking by calling (727) 538-4188 today.
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