Marriage and Bankruptcy

 What happens when only one spouse files for bankruptcy?  First, we have to understand the background behind the situation.  How was the debt incurred?  What is the financial relationship between the spouses?  Just because you’re married it does not necessarily means that you both owe on the same debts. 

The debt and property you acquire before you are married are considered separate.  People often come into a marriage with their own individual debt load.  Once you are married any debt or property acquired from that point forward, either individually or as a couple, is considered community property and community debt. 

Let’s say a husband wants to file for bankruptcy, but his wife is totally against it.  They’ve only been married a short time and she had a very pristine credit record prior to getting married and still has little debt in her name.  For the husband, it is the opposite.  He’s in over his head and needs help to get out.  Knowing his debt was considerable, they chose to keep separate accounts.  She never became a co-debtor. 

All this considered, when he files for bankruptcy it should have zero effect on her credit.  It is illegal for the credit card companies to hold her husband’s bankruptcy against her.  Of course, had they acquired any property while married it will have to be disclosed in the filing. 

Even so, her credit remains clean.  Her report would simply say that her co-debtor had filed for bankruptcy, not her.