The first thing your spouse should know is that they don’t have to file bankruptcy with you; you have the choice to file jointly or individually, with the one filing individually having no effect on the other, which means it won’t affect their credit report. I generally have married couples come in and meet me together even if they’re not filing together, because it’s a great chance to answer questions, dispel myths and alleviate fears surrounding bankruptcy, and show both of them the benefits of bankruptcy and the problems that it can solve. I invite anyone who is having issues with their spouse regarding the decision to file bankruptcy to come in together for a consultation, to discuss everything and address their concerns.
What is the Difference Between Filing Separately or as a Married Couple?
If you’re filing as a married couple, it’s as if you are one person. Every debt that either spouse has will be included, as well as debts both spouses hold jointly. On the other hand, when you file as an individual, your personal debt obligations will be discharged, but theirs will not. For example, if you have a car or a mortgage both of you signed onto, the responsibility of the spouse who filed will end, but the spouse who didn’t will still maintain their responsibility.
This issue can sometimes cause problems with creditors; they will become nervous at having lost a guarantor and they worry that the other person won’t be able to afford the loan and they’ll be left holding the bag, but it depends on the spouse that’s left. If they are on solid financial ground, there may be no reason for them to file bankruptcy.
Of course, if you’re both having trouble, just having one of you file bankruptcy may not take care of all your problems. You look at these instances on a case-by-case basis, but it can be a good thing to do together if you’re both having trouble because it kills two birds with one stone; it’s half the paperwork, and it makes more sense than having one spouse do it now, only to have the other file a year or two later.
Can Bankruptcy Eliminate All IRS Debt or Are there Limitations?
The effect of bankruptcy on taxes will depend on when you owed them. Taxes owed within the last couple of years are dischargeable; you’ll have to pay those, but older tax bills, usually more than 3-5 years old, can be discharged by a bankruptcy.
How and When Can I Start Rebuilding My Credit Score After Filing For Bankruptcy?
When you file bankruptcy, your credit will practically be rebuilt automatically because the problems that are bringing your credit score down now will be wiped clean; it’s not unusual for a person’s credit score to go up almost immediately after filing bankruptcy. It won’t take you all the way to 800, since the bankruptcy itself will hurt the score a bit, but the net difference can usually bump it up 50 points or so, because of all the old items are all gone.
In terms of rebuilding your credit, you will have the ability to borrow responsibly; perhaps a car loan or a small credit card or something like that, and as long as you’re making monthly payments and staying on top of it, you will begin to rebuild your credit. If you pay everything on time, you can build your credit score back up pretty quickly.
For more information on Explanations to A Skeptical Spouse, a free initial consultation is your best next step. Get the information and legal answers you’re seeking by calling (801) 441-2013 today.