If you’re married and considering filing a bankruptcy without your partner, you’ve probably have wondered: “How will my bankruptcy affect my spouse?”
The good news is that in the vast majority of cases your bankruptcy will have no impact on your spouse. None! And we know that for a few reasons.
First, each person has a separate credit history and a separate score. These are not mixed simply because of marriage. There is “no married people’s” credit report which combines your reports. That simply does not exist. And when people get married their credit scores are not averaged. They remain separate.
So, for example, if you open up a credit card in your own name and do not add your spouse in some way, the card never even appears on your spouse’s report. If you make your payments on the separate credit card and they are on time or even if you are consistently late, it does not help or hurt your spouse’s credit score.
Separate debts are simply not reported on anyone elses credit report and do not affect anyone elses credit score. This does not change because of marriage.
For that same reason, if you file a bankruptcy on separate debt, it also is not noted on your spouse’s credit report and will not affect their credit score.
Now, if there is joint debt, which is where both you and your spouse are responsible for the debt, and only one spouse files a bankruptcy, there is no effect on the non-filing spouse’s credit score as long as the non-filing spouse continues to pay on the debt. And that is key.
Even if a creditor does report a joint debt was included in a bankruptcy on a non-filing spouse’s credit report, that does not affect their credit score. However, in such a situation, the non-filing spouse should write the credit reporting agency to have the inaccurate notation removed.
The second reason why one spouse’s bankruptcy will generally not impact a non-filing spouse is because in Illinois spouses are allowed to own property in their separate names.
Added to this, the vast majority of debts, such as credit cards, car loans, and mortgages, are created by contract meaning that only the people who agreed to be responsible for the debt can be affected by it. And except in rare instances, in Illinois one spouse is not required to pay the debts of the other, either through their wages or assets.
So if you open a credit card in your own name and your spouse does not agree to be jointly liable on it, the credit card can only look to you for payment. If you fail to pay your separate debt, the credit card cannot sue your spouse, they cannot garish your spouse’s wages, they cannot take your spouse’s separate bank account, etc.
The credit card can only go after the person who agreed to be liable for it. This does not change because of marriage.
For that reason, if you file a bankruptcy, your non-filing spouse’s separate property and wages cannot be taken by the court or the trustee to pay your debts.
Even if you have joint property, your non-filing spouse’s portion of the property cannot be taken to pay your debts. And while joint property can sometimes be sold, the non-filing spouse’s portion of the property must be returned to the non-filing spouse. It is never used to pay the debts of the filing spouse.
Now what we have discussed are simply generalities. There are situations which do not fit neatly in these rules. But that’s why you need an experienced attorney, such as myself to review your situation.
When we meet, one of the things I am looking for is to see if there will be any effect on a non-filing spouse because I understand it is a touchy subject. So if there will be an impact, I will let you. That is one of the reasons we have a free consultation.
So if you have debt that you cannot afford to pay, call me, attorney Robert J. Skowronski, at 773-283-1600 to set up your free consultation. You can also email me.
In most case you’ll see that what you were worried about, does not actually exist, and you’ll find yourself saying “I should have filed a bankruptcy earlier.”