Marriage and Bankruptcy

Marriage and Bankruptcy

 

In a marriage, both spouses generally file bankruptcy. In community property states such as Washington, a spouse who files alone should be careful because all property acquired during the marriage is considered to be owned by both parties. If a spouse files alone, he or she must list the other spouse’s property on the bankruptcy and protect them with an exemption to keep it safe from creditors.

Debts taken out during marriage are also considered to belong to both spouses regardless of who signed the loan, as long as the debt was used to support the couple during marriage. If a debt is in only one spouse’s name and that spouse files bankruptcy, the other spouse is still at risk of debt collection.

If a married couple is getting divorced, sometimes it would make sense to file a bankruptcy together before the divorce. That would eliminate a big issue in the divorce—who pays the debt. However, if a divorce decree is entered before the bankruptcy is filed, the spouse who is ordered to pay any marital debt still has to pay it. The original creditor can still collect from the spouse who did not file bankruptcy and that spouse can go back to divorce court to enforce the payments.