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The obligation to pay the debt is based on an agreement between the person(s) and the creditor. A spouse is not responsible for the debts of the other spouse merely because of the marriage. If only one spouse has contracted to pay the debt, then only the spouse is responsible for the debt. If both spouses are obligated and contractual to pay the loan, both spouses are responsible for 100% of the loan. If both spouses are contractually obligated to pay the debt, the creditor may approach and collect any percentage of the debt from either spouse, but never more than the total amount owed. In other words, the creditor can receive 60% from one spouse and 40% from the other, or 20% from one spouse and 80% from the other spouse.
If two people want to file for bankruptcy together, both people must be married. In general, it is not necessary for both spouses to file for Chapter 13 or 7 protection. When evaluating whether a spouse should file individually or jointly, each person should carefully consider their overall financial circumstances, independently and together with the other spouse. Filing for bankruptcy protection may not be beneficial to both spouses.
A person who files for Chapter 7 bankruptcy protection and meets all the criteria will discharge and eliminate certain debts. The following scenario relates to a married couple who owes a joint debt to a creditor and only the husband files for Chapter 7 bankruptcy protection. If the husband meets all of the Chapter 7 criteria for a discharge, his debt to the creditor will be extinguished. However, the creditor will be allowed to pursue the wife for any balance due to the creditor because she is not protected by the bankruptcy filing. If they file jointly and obtain a discharge, the creditor will be unable to pursue him and/or her for the debt.
Unsecured debt is debt that is not secured by property, such as the following: Credit card debt; personal loan; And, health care loans, etc.
The following one pertains to Chapter 13. In a Chapter 13, the person(s) who file (the debtor) must make monthly payments to a trustee (the administrator), typically for a period of 36 to 60 months. The amount and number of payments are based on several factors. In addition, determining which creditors are entitled to money from monthly trustee payments is based on several factors. The debtor may be required to pay all, a portion, or none of the unsecured debt through monthly trustee payments (bankruptcy plan).
In Chapter 13, the debtor is required to treat all unsecured creditors equally. Therefore, a spouse filing individually cannot decide to pay 100% of the debt to one credit card company and 5% to another credit card company. Typically, if one unsecured creditor is paid 100%, all unsecured creditors must be paid 100%. If unsecured creditors are receiving less than 100%, then each creditor must be paid on a pro rata basis.
The following scenario pertains to a husband who owes a joint debt with his wife, and files a Chapter 13 individually and without his wife. Immediately after a Chapter 13 filing, the “automatic stay” and “co-obligor stay” come into force. The “automatic stay” prevents the husband’s creditors from pursuing any action against the husband. The “co-obligation” initially prevents any creditor from pursuing the non-bankruptcy filing spouse (spouse) who pays a joint debt with the fleeing spouse (spouse). However, the court will allow a creditor to pursue the non-bankruptcy filing joint debtor spouse (spouse) if the filing spouse (spouse) does not pay 100% of the debt to the unsecured creditor. In other words, if a Chapter 13 joint debtor spouse who files individually pays less than 100% to the unsecured creditor, the creditor can apply to the court for permission not to be paid through trustee payments. to proceed against the non-filing joint debtor spouse for the remaining amount.
A person can file Chapter 13 for the purpose of saving a home from foreclosure. Generally, if the mortgage and note are both in a spouse’s name, and they are unable to modify either mortgage and/or note, only one spouse will need to file to protect the home from foreclosure. .
A person can file Chapter 13 for the purpose of saving an auto from foreclosure. Generally, if the financing is in the name of both spouses, and they are unable to modify the financing agreement, only one spouse will have to file to protect the auto from possession. If the financing is in the name of a spouse, generally only that spouse will need to file to protect the auto. This interpretation may vary.
New Jersey bankruptcy attorney, Robert Manchel, Esq. The author of this article is Robert Manchel is certified as a Consumer Law Bankruptcy Attorney by the American Board of Certification, which is accredited by the American Bar Association.
You may obtain additional information about the bankruptcy by calling Mr. Manchel at his toll free number at 1(866)-503-5655 or by visiting his web site. http://www.bankruptcylawyer-nj.com
Robert Manchel handles cases from the following counties: Cumberland: County; Atlantic County; Salem County; Gloucester County; Camden County; Burlington County; Hunterdon County; Somerset County; Middlesex County; Ocean County; Mercer County; Monmouth County; And, Philadelphia.
Disclaimer: Bankruptcy laws are complex and may be applied differently from case to case and state. There can be many exceptions and variations to each law and rule. Do not rely on the information in this article. If you are considering filing for bankruptcy protection or have foreclosure issues, you should consult with an experienced attorney. We are a debt relief agency. We help people file for bankruptcy relief under the Bankruptcy Code.
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