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Ask Dr. Don

Will my husband's bankruptcy affect me?

Dear Dr. Don,
My husband wants to file for bankruptcy for debts he incurred before we married. Will this affect me? Can he also include debts from state fines?
Sarah Segregate

Dear Sarah,
If he declares bankruptcy, it's going to affect you in some manner. Besides impairing his ability to get credit, and thereby your ability to get credit based on your combined incomes, it's going to depend on how much he owes these creditors.

The bankruptcy court will first look to the property he owns individually to satisfy these debts, but it will then look to his nonexempt jointly held marital property. In a community-property state, you could also lose your interest in any jointly held marital property.

When your husband files a bankruptcy petition, he will list the debts that he wants considered by the bankruptcy court. Your credit report is separate from your husband's. Debts that are his alone don't show up on your credit report.

In a Chapter 7 bankruptcy filing, which is also known as a liquidating bankruptcy, the court will look to the bankruptcy estate to pay his creditors. Assets that you hold jointly can be part of his bankruptcy estate. How the court defines what assets are jointly held depends on where you live.

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Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington and Wisconsin are community-property states. In a community-property state, assets acquired during the marriage other than gifts or inheritances are jointly owned. This community property could become part of the bankruptcy estate.

The other 41 states use a process called equitable distribution to determine what each spouse owns. His property and his interest in any jointly held property could become part of the bankruptcy estate.

You have a better chance of protecting your assets in these states, but the bankruptcy court can view asset transfers prior to the bankruptcy filing as fraudulent if the court believes that the only reason for the transfer was to exclude the asset from the bankruptcy estate.

According to Nolo.com, fines and penalties imposed for violating the law, such as traffic tickets, and criminal restitution aren't dischargeable in a bankruptcy filing.

Remember that I am not an attorney and cannot give you legal advice. Bankruptcy law is very complex and varies from state to state. I have tried to give you some general information but cannot advise you on your specific situation.

Your husband can file for bankruptcy without the benefit of legal counsel but may wind up wishing he had paid an attorney to assist him.

Post-bankruptcy credit reports

Dear Dr. Don,
I was planning to file a Chapter 7 bankruptcy. I have become disabled and am now on a fixed income. Will my credit file after the bankruptcy still reflect my credit standing before the bankruptcy?
Terry Tally

Dear Terry,
Favorable information about your credit history stays on your credit report indefinitely. Unfavorable information remains on your credit report for seven years -- 10 years for a Chapter 7 bankruptcy filing.

The credit reports of the three principal consumer reporting agencies have different formats, but they will all reflect the status of your bankruptcy filing and whether your accounts were paid according to the terms of the credit agreement. You can see sample credit reports on the Equifax, Experian or Trans Union Web sites.

-- Posted: May 9, 2002

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See Also
10 ways to bounce back from bankruptcy
A 7-step plan for fixing your credit report
More Dr. Don stories


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