If I declare bankruptcy, will my spouse be liable for my debts?
Filing for bankruptcy
If you and your spouse file jointly for bankruptcy, it can seem like your spouse is liable for your debts. However, that's not the case in most cases.
You're both going to be responsible for paying back any debts you owe together as a couple, but that doesn't mean your spouse is on the hook if you declare bankruptcy. The only time they would have any responsibility is if they signed up for a loan with you. Even if they cosigned, they'd only be held responsible if the creditor could prove that they had the ability to pay the debt at the time of signing.
Couple filing for bankruptcy
However, when a couple files separately, one of them would have to go through their own separate bankruptcy process—which would entail listing all of their debts and assets on their own petition. In this situation, it's possible that one person's debts could be treated differently than the other person's, but in most cases, it would be better to file jointly because doing so could provide some tax benefits and streamline the process.
A Common worry
A common worry when people consider bankruptcy is whether they will be held liable for the debts of their spouses. Fortunately, there are protections in place to keep you from being responsible for your spouse's debt if you file individually or separately.
You won't have to pay your spouse's debt if you file under the:
-Chapter 7 (if you don't have any property that can be used to pay), or
-Chapter 13 (if you don't make enough money to pay).
The short answer is: maybe. This is one of the many complicated and confusing issues surrounding bankruptcy.
If you have any questions, you can get a free consultation with the Best Attorneys in Utah.
Ascent Law LLC:
8833 South Redwood RoadSuite C
West Jordan, UT 84088
(801) 676-5506
