How Does Bankruptcy Work If You Are Married

June 17, 2010 · Filed Under Frequent Asked Questions

Many people have asked me “how does bankruptcy work if you are married?” Well this will differ in everyone’s case because everyone is different. There can be several different answers and you may want to seek legal advice as to how your situation pertains to this question.

If both of you have joint accounts and both of your incomes can not pay the bills and make ends meet then both of your names will be in both of your names since the debt is in both of your names. This means that both of your credit will be ruined for 7-10 years.

Being married does not necessarily mean that both of you have to file for bankruptcy. The creditors hold the person who signed the contract responsible for repayment of the loan. If the spouses name is not on the contract; then they have nothing to worry about and they will not be held liable for the repayment of the loan.

However if you combine both of the incomes and you can make ends meet and want to save your credit; then I highly recommend that you do everything possible to avoid filing bankruptcy. Once you file then that mark will be on your credit report for 7-10 years and will make it almost impossible to get anything that you need. If you are lucky to get a new loan then you can expect to be paying a ridiculous interest rate.

If you both file a joint tax return and you owe the government money; then you both are held liable for the taxes that are owed. Like I said the situation will vary from person to person; this is why I highly recommend that you seek legal advice about your personal situation.

When it comes to tax time then the person who file the bankruptcy is the person who will have to note it on their tax return. So hopefully this answered your question as to “how does a bankruptcy work if you are married.” Click Here

Do not forget to sign up for our FREE ecourse that will help you rebuild your credit to get back on your feet and become smarter with your finances.