||Ask Dr. Don
Will my husband's bankruptcy
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
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
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.
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
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?
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,
Union Web sites.
-- Posted: May 9, 2002