When You End Up Marrying Your Spouse’s Debt
If you plan on marrying someone facing bankruptcy do you also marry their debt? Generally, the answer is “no”, but in some cases, your fiance’s debt walks down the aisle. You are not liable for your spouse’s debt- that’s the general rule. Sometimes you end up paying the debt anyway. Consider the case of young couple who came to my office this week.
A young lady had over $50,000 of credit card and related debts. She was a school teach with income of approximately $30,000, well below median income. She had no non-exempt assets and based on her income alone she could solve her debt problems with a Chapter 7 bankruptcy. She stated that she recently married a man whose income was near $75,000. The husband had no unsecured debts. Because means test income is based on “family income” her new husband’s income had to be considered in the wife’s means test even though the husband had no need to file bankruptcy. I explained to the new client that because she was living with her relatively affluent new husband she had become ineligible to file Chapter 7, and her only bankruptcy option was a repayment plan under Chapter 13. In effect, her she and her husband would have to use the husband’s earning to repay part of the wife’s debt in Chapter 13. The husband married his wife’s debt.
People considering both bankruptcy and marriage should speak with a bankruptcy attorney before they get married. In this case, the wife could have, and should have, filed Chapter 7 bankruptcy before the wedding day (or, at least before she and her husband began living together as one household). In other instances, marriage can increase household size to help qualify for Chapter 7, or marriage can result in the merging of financial accounts and other property that make valuable assets exempt in a subsequent Chapter 7. Marriage, divorce, and bankruptcy are interrelated; proper legal planning can either save or cost you substantial money.
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