What Happens If I Marry a Man in Bankruptcy?
Marriage marks the start of a new phase of your life. In a sense, filing bankruptcy does the same. However, if your future husband is currently in bankruptcy proceedings, your new start may be fraught with financial pitfalls that can put your financial future in jeopardy. The best thing to do is to get the bankruptcy first, then get married. This will keep you financially safe.
Other People Are Reading
-
Understanding Bankruptcy
-
The process of bankruptcy allows debtors to either discharge or restructure debt. Chapter 7 and Chapter 13 bankruptcies are for individual debtors, rather than businesses.
Chapter 7 bankruptcy, also known as liquidation, is typically filed by debtors with substantial unsecured debt, such as credit card debt or payday loan debt. Any assets are sold to repay creditors, and the remaining debt is discharged. A Chapter 7 bankruptcy will remain on the debtor's credit history for 10 years.
Chapter 13 bankruptcy, also known as debt adjustment, allows debtors to adjust the terms of their debts in order to repay some or all of their obligations during the three- to five-year period of the bankruptcy proceedings. Large secured debts, such as mortgages or auto loans, may be restructured to allow for a longer repayment period. Chapter 13 bankruptcy affects the debtor's credit report for seven years.
Bankruptcy and Marriage
-
If bankruptcy cannot be avoided and marriage is also on the horizon, Dr. Don Taylor, Ph.D./ C.F.A., writing for Bankrate.com, advises readers that bankruptcy should come. Filing bankruptcy prior to marriage can prevent harm to the potential husband or wife's credit, and boosting the couple's chances to gain new credit during the period the bankruptcy is current on the filer's credit report.
Filing for bankruptcy prior to marriage also gives the filer time to get his or her finances under control before both parties combine finances. While a bankruptcy will stay on the filer's credit report for seven to 10 years, it is possible to begin rebuilding credit soon after the court-ordered obligations are satisfied.
-
Community Property
-
Timing is especially important if your potential spouse has filed bankruptcy and you live in a community property state, writes Dr. Taylor.
Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington and Wisconsin all recognize community property laws. In these states, any property--or debt--that either spouse brings into the marriage is considered marital property.
If you live in a community property state, it is advised that bankruptcy be under way before you marry your spouse to avoid your potential spouse's poor credit history to become your credit history, as well. Filing prior to marriage will also prevent you from assuming responsibility for your potential spouse's debt.
Making a Fresh Start
-
If you do marry someone who has filed for bankruptcy, Dr. Taylor writes, it is a good idea to keep your finances separate until your spouse's credit has rebounded--and until your spouse has learned sound financial practices. Keeping your credit separate will protect your credit rating, Dr. Taylor explains, but if you need to apply for credit jointly, to buy a home or car, for instance, the name of the person with the best credit should come on the application first.
While your potential spouse's bankruptcy does not have to negatively affect your credit, poor financial habits that resulted in bankruptcy should be changed before your finances are combined.
The Consumer Credit Counseling Service advises those who are considering marriage to discuss your finances openly and honestly before marriage, revealing any debts or bad financial decisions. Together, you and your potential spouse should decide how you will handle finances in your marriage. Consulting a financial adviser or a credit counseling service can help those considering marriage to learn how to create a budget and set financial goals.
-
