Who Pays Marital Debts in Bankruptcy Cases?

If you are married and considering bankruptcy there are many complex issues to work through and understand, such as who pays marital debts in bankruptcy cases. Marital debt is generally considered any debt that was taken on jointly or by either spouse individually during a marriage.

How marital debt is handled in a bankruptcy case depends on several different things including:

• who is filing the bankruptcy
• the type of debt involved
• whether or not the marriage has been dissolved in a divorce
• the state that you live in

Who is Filing Bankruptcy?

Let's take these one at a time starting with who is filing. If you are married you do not have to file for bankruptcy jointly, one spouse can file bankruptcy without the other spouse.  Although marital debt is any debt taken on by either spouse, in most states if only one spouse files bankruptcy then only the debts they incurred alone can be discharged.

Type of Debt

How marital debt is handled in bankruptcy cases also depends on the type of debt. Secured debts, such as your house and your car might even be exempt from the bankruptcy in certain circumstances - which means you may get to keep your house and car, but you are also keeping the debt, so you continue to pay. One interesting note about credit card debt to be aware of is that even if only one spouse signed for the card, but the other spouse was added as an authorized user and you provided that spouse's social security number to the credit card company you are both likely responsible for debt repayment.

Still Together or Already Divorced?

Who pays marital debts in bankruptcy cases when the couple has been divorced, and then one of the ex-spouses files for bankruptcy? This can get really complicated. If the ex-spouse filing for bankruptcy was responsible for paying off marital debt, and it gets discharged it is possible that creditors can come after the other spouse for repayment. However, if that same ex-spouse owes court ordered alimony or child support those debts are not removed or discharged in a bankruptcy.

Your State

Every state has its own family law and bankruptcy law. In Hawaii if you file bankruptcy you'll be allowed to keep 100% of your necessary personal household goods and clothes, and another $1,000 in jewelry, but in Kentucky you can only keep $3,000 worth of household goods, appliances, clothing and jewelry.

Getting Legal Help

Plan early to speak with an experienced local attorney to get the best advice to fit your situation. If you are divorced and you discover your ex-spouse is filing bankruptcy you should talk to an attorney who is well versed in family law and bankruptcy to find out how to best protect your own finances and future.