It is often advisable to have one spouse file bankruptcy and leave the other spouse off of the the filing. The end result is that the spouse’s credit that has not filed the petition in bankruptcy remains unaffected. Whether or not a joint petition is necessary depends on how the debt was created. These issues come back to simple contract law. If one spouse has the credit cards, medical bills or other debts in their name alone, then it may be possible to leave the non-contractually obligated spouse out of the filing altogether. The non-filing spouse’s income and assets are still considered in the case as California is a community property state. If assets were acquired during marriage, then the spouse that files for bankruptcy will have all of the community assets as part of the consideration of what the bankruptcy estate has to offer creditors. The consideration includes a complex exemption analysis. The non-filing spouse is also protected by something called the co-debtor stay. 11 USC 1301. The purpose of the co-debtor stay is to protect the filing spouse from pressure or coercion by preventing collection of co-debt from friend or relatives. The co-debtor stay only protects against collection from the non-filing spouse of consumer debts, which are debts incurred for personal, family or household purposes. Mortgage debts are consumer debts, income tax debts are not considered to be consumer debts and therefore the non-filing spouse will not enjoy the co-debtor stay protection from taxing authorities if the filing spouse is seeking to discharge (or wipe out) tax debt for which the non-filing spouse is also liable for. To learn more . . .
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We serve clients throughout Northern California. To schedule a free consultation with a bankruptcy lawyer at our firm, call 408-298-8910 or 831-998-8144 or contact us by email. Evening and weekend appointments are available upon request.
We are a debt relief agency. We help people file for bankruptcy relief under the Bankruptcy Code.