In some states, your spouse is inherently liable for any debts you incur, while in others, your spouse is not liable for your debts unless he or she is a co-signer on the debt. If your spouse is automatically liable under the law, it may be best to file jointly for bankruptcy.
Frequently, a person will file for bankruptcy believing that assets in his or her spouse's name cannot be affixed, only to learn too late that this is not the case. When preparing to file for bankruptcy, it is advisable to counsel a competent bankruptcy attorney who can advise you on whether to file individually or jointly. In states besides Washington, Wisconsin, Texas, Nevada, Louisiana, Arizona, California, New Mexico, and Idaho, you are not inherently liable for your spouse's debts unless you have cosigned.
In the nine states where community property law applies, creditors may attach any income or assets acquired during the marriage if you file for bankruptcy. Exceptions to community property include inheritances and gifts, which you retain if your spouse declares bankruptcy. However, you should be aware that as a resident of one of these states, you are liable for debts incurred by the other. In this case, you must declare joint bankruptcy if your spouse has unmanageable debts.
After deciding to file for joint bankruptcy, the final piece of information you need is the type of bankruptcy you must choose. Chapter 7 bankruptcy is an option that eliminates all debts through the liquidation of nonexempt assets. If, on the other hand, you wish to retain some of your assets, Chapter 13 bankruptcy can help you repay your obligations over a period of 3 to 5 years. The ability to catch up on missed mortgage payments is an added benefit of Chapter 13 bankruptcy.
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