Personal Bankruptcy and Your Spouse

How Will a Personal Bankruptcy Affect my Spouse?

Many married couples wonder how filing for bankruptcy will affect each other if both individuals do not file bankruptcy together. In most cases as long as one individual is the sole owner of the debts then the bankruptcy should not affect the other person's credit scores and ratings.

How Can One be the Sole Owner of Debt?

In order for one person to be the sole owner of the debts this means that the other person has not co-signed for any of their partner's debt. However, if one of the partners has signed for another person's debt then the debt belongs to both parties, not just one. If one partner files for bankruptcy and the other partner has co-signed for a portion of their debt then the bankruptcy process affects both parties because both parties are liable for the debts.

What About Supplementary Credit Card Debt?

Many spouses share credit card accounts. If both parties names are not on the primary account but one partner does have their name on a supplementary account then both parties are still liable for all portions of the credit card debt. Not only is the supplementary credit card holder liable for the debt on their credit card but they are also liable for any debt charged to the primary account holder's credit card. Both the primary and supplementary credit cards are linked with the same account number; this is why both parties are liable for all portions of the credit card debt.

What About Bankruptcy Affecting A Divorced Spouse?

Many people believe that if they become divorced from their partner then they will not be liable for the other partner's debt. This is untrue in the case of credit debt and also in the case of any joint debt accounts. Both parties of the divorced couple remain responsible for the entire portion of any joint debt. This means if one partner defaults on paying back a portion of their debt then the other person is still liable for the defaulted portions. If a partner files for bankruptcy on joint debts then the creditor of the debts still has the legal ability to pursue the other person for repayment of the debt.

Always Think Before You Spend

All married couples should seriously contemplate any purchases they make on joint accounts. In the event the couple becomes divorced it is important to remember that both parties are still liable for all debt that has been incurred.