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Bankruptcy and Your Spouse

Bankruptcy can have a great impact on your spouse, especially in the state of California. Many couples believe they can protect their spouse by not including them on a bankruptcy petition. However, that is not always the case. Most uninformed debtors are confused about their options.

Common questions potential filers ask include:

  • Can I file without my spouse? Yes, in certain circumstances. Your filing can only include debt prior to your marriage. In California, any debt incurred during a marriage is the legal responsibility of both parties.
  • Am I liable for my partner’s debt? Yes, in California, you are responsible for your spouse’s debts.
  • What if I have a prenuptial agreement? Your spouse’s debts will not be your legal responsibility if you specifically agreed to keep incurred debts separate in a premarital agreement.
  • If I file without my spouse, will his or her credit score be affected? No, only your FICO score is changed by a separate bankruptcy filing.
  • What is community property? In community property jurisdictions, property acquired during the marriage is owned jointly by both spouses. California is a community property jurisdiction, meaning both halves of the community property are accounted for in the bankruptcy estate. All of the community property is available to pay the creditors of the spouse who has filed.

Given that California is a community property state, an Irvine bankruptcy attorney may recommend filing jointly for bankruptcy if you have been married for a certain period. If you file separately, and your debts are discharged, it does not relieve your spouse’s liability to those debts.

Filing jointly allows both spouses to start fresh, with no debts of either spouse holding them back. Also, you will save money by only using one attorney and paying one court filing fee. Talk to a Chapter 7 bankruptcy attorney in Orange County to learn more about how to file and whether filing jointly is appropriate for your situation.

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