What Happens When Your Spouse or Ex-Spouse Files for Bankruptcy?

Consumer bankruptcy in the U.S. can be filed by an individual or by a married couple according to U.S. bankruptcy law. Yet it is important to know that, even if you or your spouse are considering personal bankruptcy, the other spouse is not required to file for bankruptcy in a joint petition. At the same time, if spouses are married, even if they are separated, one spouse’s bankruptcy could have a major impact on the other spouse’s current and future finances. What do you need to know if your spouse or your ex is considering bankruptcy? Our Oak Park bankruptcy attorneys have more information for you.

If You are Already Divorced, You Do Not Need to Consider Your Ex’s Bankruptcy

If your divorce has already been finalized, it does not matter if your ex-spouse is filing for bankruptcy as far as your personal financial situation goes. In other words, your ex-spouse’s decision to file for bankruptcy will not impact your current assets or debts. At the same time, if your ex-spouse does file for bankruptcy and currently pays spousal support or child support, your spouse may be able to successfully ask the court to modify the amounts owed in the future (but will not be able to discharge any back-owed family support).

Married Couples are Not Required to File Jointly for Bankruptcy

An important thing to know, as we mentioned above, is that there is no requirement for a bankruptcy petition to be a joint petition when a party filing for personal bankruptcy is married. In other words, if your spouse files for bankruptcy, you are not also required to file for bankruptcy as a joint petitioner (and vice versa). However, your spouse’s bankruptcy could impact your financial circumstances nonetheless, which we will explain below.

During Your Marriage, Joint Assets and Debts Can Be Impacted By One Spouse’s Bankruptcy Filing

If you are married — even if you are separated, and even if you have already taken initial steps toward a divorce — you still own assets and debts jointly with your spouse. These assets and debts are known as “marital property.” Accordingly, when your spouse files for bankruptcy, in addition to their separate property, marital property will likely be affected by the bankruptcy filing. The overall impact of one spouse’s bankruptcy filing will depend on the specific facts of the case and whether the spouse is filing for a liquidation bankruptcy (in which case non-exempt marital assets could be liquidated) or a reorganization bankruptcy. In addition, joint debts could result in the spouse who does not file for bankruptcy being solely responsible for those debts.

Contact a Bankruptcy Attorney in Oak Park for Assistance

There are multiple steps you may be able to take to protect yourself if you are married and your spouse or your ex is considering personal bankruptcy. You should get in touch with an experienced Oak Park bankruptcy attorney as soon as possible to learn more about your options and how you can avoid being responsible for your spouse’s debts or having certain marital assets liquidated in a Chapter 7 bankruptcy case. These types of cases involving spouses can be complex, and it is important to have a lawyer on your side. Contact the Emerson Law Firm today for more information about how we can assist you.



See Related Blog Posts:

Checklist for a Chapter 7 Bankruptcy

Learning About Recent Consumer Bankruptcy Trends

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