In A State—Marital Bliss Turns to Money-Animosity in Community Property States
In this economy, progressively more men and women see desultory credit score as a deal-breaker for potential suitors. If bad credit didn’t keep you from signing those conjugal papers, you might shrewdly learn how to dance around the event of a joint bankruptcy by taking pains to place your funds in separate accounts and eliminate any credit crossover.
If you and your partner have an auto title loan or a home loan in both of your names and your partner defaults, it will impact both of your credit scores. If your partner files an individual bankruptcy looking to discharge or negotiate the debt of a loan that your name is in, the creditors can and will hound you as the responsible party; essentially, all of your efforts to avoid the credit effects of a joint bankruptcy could misfire into creditor harassment. Marriages in community property states make it exceptionally more difficult to maneuver around a joint bankruptcy.
Community Property laws, in simple terms, rule that any property or debt acquired during the term of the marriage is attributed to both spouses. There are nine U.S. States, primarily in the West, that observe the ancient Spanish law tradition of community property in marriage. Texas, New Mexico, Arizona, Nevada, Washington, Nevada, Louisiana and Idaho have all observed “Community Property Marriage” laws for some time, while Wisconsin has only recently adopted the jurisdiction. In addition, marriages in Puerto Rico, Alaska, and many Native American nations can opt for a community property marriage—many states with a prevailing Hispanic body observe these laws, as they were adopted from Spain-influenced Mexico.
The specifics of community property laws are varied. For instance in California, property and debt is split 50/50—which makes waiving the option for community property and protecting your assets through a prenuptial agreement particularly vital.
It’s important to note that an individual can file for bankruptcy and all “community” property would benefit from the discharge. However, the other spouses separate property would still be subject to collection, and therefore it isn’t always in the best interest of both spouses to if one were to file on their own.
If you reside in a Western community property state and your spouse is set to file for bankruptcy, you may worry it’s not the right decision for your credit. A bankruptcy lawyer from Legal Helpers can help you safeguard your financial future, and help decide whether bankruptcy is the right plan for you. Talk with one of our professionals today for your free initial consultation. Call a Legal Helpers bankruptcy pro at 1-800-260-1402.
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