If I Am Married, Does My Husband Have to File Bankruptcy With Me?
Filing bankruptcy in a marriage can be a complicated decision involving no small amount of paperwork. The decision to file bankruptcy with your husband should be made only after considering all the advantages and disadvantages. A joint appeal for protection may be necessary if you're attempting to protect assets, while a separate bankruptcy filing may be appropriate if you're simply trying to expunge credit card debt or medical bills.
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Secured Debts in Bankruptcy
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If you are filing for Chapter 13 bankruptcy, it is not mandatory for your husband to file along with you. A special automatic stay or temporary order for relief is granted to co-debtors when the primary debtor files for Chapter 13 bankruptcy. This means your husband is protected from collection practices even if his name is also on the mortgage or auto loan being included in your Chapter 13 bankruptcy. As long as you make timely payments in accordance with your debt repayment plan, he remains protected from litigation.
Joint Chapter 7 Bankruptcy
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Filing joint Chapter 7 bankruptcy may be a smart financial move if you and your husband's assets are completely tied together. This becomes more likely the longer you are married. A joint appeal for bankruptcy protection can increase the exemption limits for personal and real property in your state, meaning you may be able to protect more assets than if you simply filed for bankruptcy on your own. This might be the difference between keeping your home and having it liquidated by the court to pay off your debts.
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Separate Chapter 7 Bankruptcies
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Filing for Chapter 7 bankruptcy separate from your husband also has its advantages. If your mortgage is nearing foreclosure, the automatic stay granted by your bankruptcy filing can prevent your mortgage lender from filing foreclosure paperwork for a few months. This may give you enough time to get your finances in order and bring your home loan current. If you need more time, you can have your husband file for Chapter 7 bankruptcy on his own immediately after your own bankruptcy is completed. This can increase your umbrella of protection for over half a year.
Bankruptcy and Credit
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Your husband may not be included in your bankruptcy filing but that doesn't mean his credit score doesn't suffer. Debts that are expunged because of your bankruptcy may appear on your husband's credit report if the debts were entered into jointly. Debt cancellations can stay on your husband's credit report for up to 10 years, making it just as hard for him to secure new lines of credit as it is for you to open new credit accounts with a new bankruptcy.
Community Property States
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Nine states across the country, including Texas, Arizona and California, have community property laws for marriage. This means all property in a marriage, including debt, is considered marital property. If you file for bankruptcy in a community property state, any property owned jointly by you and your husband may be included in the bankruptcy regardless of whether or not your husband files along with you. Property your husband owned before the marriage is exempt from the bankruptcy process.
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