Your Spouse’s Debts in Bankruptcy—Are You Responsible?

Your-Spouse's-Debts-in-Bankruptcy

Does your spouse own a small business that’s struggling? Has he or she decided to seek bankruptcy protection to either reorganize or liquidate the debt of the business? What if you have a good job or significant assets in your name? Can your spouse’s creditors attempt to collect those debts from you? The answer, as with most things, is that “it depends.”

In most states, debts that are incurred in the name of one spouse only are the debts of that person alone, with certain exceptions. Debts incurred for what are considered necessities—food, shelter, utilities—are almost universally deemed joint debt and both spouses can be held liable for their payment.

In addition, in states like Texas, which take a “community property” approach, debts are treated much like property. Debts that are brought into a marriage are treated separately—they are only the responsibility of the party that initially incurred them, unless it can be shown that the bulk of payments on the asset were made during the marriage with joint resources. For example, if a person enters into a mortgage, but marries shortly thereafter and makes payments for another 20 years before filing for bankruptcy, the debt will likely be jointly owed.

In a community property state, though, all debts are incurred during the course of a marriage are presumed to be joint debt and either party can be looked to in satisfaction of the obligation.

Contact Heath, TX Bankruptcy Attorney Carrie Weir

I offer a free initial consultation to all potential bankruptcy clients. Contact my office by e-mail or call me at 972-772-3083 for a private meeting. With offices in Rockwall, Texas, I represent clients in Heath, Greenville, Lavon, Wylie, Mesquite and Rowlett.

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