Can a Spouse Be Held Liable for Debts Discharged in Bankruptcy in Colorado?
Married couples do a lot of things together, but filing bankruptcy needn't be one of them. If your spouse doesn't want to file, you can do so on your own, discharging your personal debts and your obligation for joint debts -- but your spouse can still be held responsible for the latter. Bankruptcy is a federal process, so this holds true throughout the U. S., including Colorado.
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Marriage and Bankruptcy
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Even if you file alone, your spouse has a role to play, Denver attorney James Pacifico says online. If you file Chapter 13, the bankruptcy court will require you pay your creditors out of your disposable income for three or five years -- three if your family income is below the Colorado median, five if above. Your spouse's income will affect that, and the court may also include her salary when figuring how much disposable income you have to pay debts, even if she opposes filing.
Debts
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Usually, the only person liable for a debt is the one whose signature is on the contract: If you bought the car or took out the credit card on your own, your spouse owes nothing. If you both signed the contract, your bankruptcy discharge will leave your spouse responsible for the entire amount. With income taxes, the law is different: If you filed a joint tax return, the IRS can hold your spouse liable for your personal tax debts as well as her own.
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Chapter 7
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To qualify for Chapter 7, your average family income for the six months before filing usually has to be under the Colorado state median, so your spouse's income will affect that. In Chapter 7, the court can use your assets and income to pay off your debts before granting a discharge, and that includes any property you own jointly with your spouse. Colorado law does exempt certain property from bankruptcy sale, such as $5,000 worth of vehicles. The figure rises to $10,000 if you're elderly, disabled or have an elderly or disabled dependent.
Considerations
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If it's your spouse, not you, who's filing for bankruptcy, you'll have to decide how much support you want to give the filing, Pacifico says. In Chapter 13, for example, the court may object to your expenses if they cut into the disposable family income that could go to your spouse's creditors. Since you're not filing, the court can't force you to stop spending the money, but that will make it harder for your spouse to complete the bankruptcy process successfully.
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