A divorce can be a hard time with many money worries. If one person files for bankruptcy, it can make things seem even harder to understand. It is good to learn how this choice can change things for you and your debts.
Can My Spouse Make Me File for Bankruptcy?
It Is Your Choice: No, nobody can make you file for bankruptcy. A judge can’t make you, and your spouse can’t make you. It is a choice you make for yourself based on your own money situation.
Filing Alone or Together: A husband and wife can file for bankruptcy together if they want. But if your spouse files alone, you do not have to. You can look at the bills you have and decide what is the best thing for you to do.
- The Choices You Have
- You can file for bankruptcy by yourself.
- You and your spouse can file together.
- You can choose not to file at all.
- Things to Think About
- How much money do you owe?
- Are the bills in your name, your spouse’s name, or both?
- What does a good lawyer think you should do?
A Real-Life Story: When Jane was getting a divorce, her husband filed for bankruptcy. He had a lot of bills from his job. Jane had no big bills in her name, so she chose not to file for bankruptcy.
What if the Bills Are in My Spouse’s Name?
When Debt Is Not Yours: If all the credit cards and loans are in your spouse’s name only, their bankruptcy may not hurt you. When they file, they are asking for help with their own bills. This can make splitting things in the divorce a little easier.
You May Not Need to File: If you have no big bills in your name, you probably do not need to file. Their bankruptcy can get rid of the money they owe. The Michigan Family Law Attorneys at our firm can help you understand this.
- Bills in Only One Name
- A credit card that only one person applied for.
- A car loan that is just in one person’s name.
- A loan from a bank to just one spouse.
- How This Can Affect You
- You do not have to pay that bill.
- Your credit score should not go down.
- The court will see the bill belongs to your spouse.
A Real-Life Story: Mike had credit cards that were only in his name. He used them to buy tools for work. When he filed for bankruptcy during his divorce, his wife did not have to worry about those bills.
What Happens to Bills We Both Owe?
The Problem with Shared Bills: Bills with both of your names on them are called “joint debts.” If your spouse files for bankruptcy, they may not have to pay their part. But the company you owe money to can still ask you to pay for all of it.
You Still Have to Pay: A bankruptcy only helps the person who files it. It does not make shared bills go away for both people. You could be left with a big bill you thought you would be sharing.
- Types of Shared Bills
- A home loan for a house you own together.
- A loan for a family car.
- A credit card you both used for shopping.
- Why This Is a Problem
- You may have to pay the whole bill by yourself.
- Your credit can be hurt if the bill is not paid.
- This can add a lot of stress to your life.
A Real-Life Story: Sam and Beth had a loan for a boat that was in both of their names. Sam filed for bankruptcy. The bank then told Beth she had to pay the whole boat loan herself.
How Does a Divorce Judge Split Up Bills?
What the Judge Does: In a divorce, a judge looks at everything you both own and all the money you both owe. The judge works to split everything in a way that is fair. This means the judge decides who has to pay back the bills.
How Bills Are Split: The judge looks at whose name is on a bill. The judge also looks at what the money was used for. If a credit card in your spouse’s name was used to buy food for the family, the judge might say you both have to help pay it. You can learn more by finding out what happens if a spouse files for bankruptcy during divorce.
- What a Judge Looks At
- Whose name is on the paper for the loan.
- If the money was used for the family.
- Who has a better job to pay the bill.
- What a Judge Can Decide
- One person has to pay a certain bill.
- You and your spouse have to split a bill.
- You have to sell something, like a car, to pay a bill.
A Real-Life Story: A credit card was in the husband’s name, but he used it for a family trip. The judge said that because the whole family went on the trip, both the husband and wife should help pay for it.
Should I File for Bankruptcy Too?
Keeping Yourself Safe: If your spouse files for bankruptcy and you share a lot of bills, you could get stuck paying them all. It is a good idea to think about what you should do. Filing for bankruptcy could be a way to keep yourself safe from bills you can’t pay.
When It Could Be a Good Idea: If the shared bills are too much for you to pay alone, filing for bankruptcy might be a smart choice. It gives you a fresh start. Thinking about if you should file for bankruptcy before or after divorce is an important step.
- Good Reasons to File
- You owe a lot of money on shared bills.
- You can’t make the payments on your own.
- You want to get rid of the debt and move on.
- Good Reasons Not to File
- You do not have many bills in your name.
- Most of the bills belong only to your spouse.
- You have enough money to pay what you owe.
A Real-Life Story: After her husband’s bankruptcy, Maria was told she had to pay their $30,000 shared loan. She knew she could not do it. She decided to file for bankruptcy too so she would not be in debt for years.
How Does Bankruptcy Hurt My Credit?
Your Credit Score Goes Down: When you file for bankruptcy, your credit score will go down a lot. A credit score is a number that shows if you are good at paying bills. Bankruptcy tells banks that you had a lot of trouble paying your bills.
It Lasts a Long Time: A bankruptcy stays on your credit report for many years. For all that time, it will be harder to get new loans. This means it can be hard to get a loan for a car or a house.
- Problems from Bad Credit
- It can be hard to get a new credit card.
- It can be hard to get a loan for a car.
- It can be hard to rent a new apartment.
- How to Fix Your Credit
- Pay every new bill on time.
- Get a special type of “secured” credit card.
- Try not to get any new big bills.
A Real-Life Story: After John filed for bankruptcy, he tried to get a loan to buy a truck. The bank told him no. The bankruptcy on his credit report made him too much of a risk.
Are There Other Ways to Handle Bills?
You Have Other Choices: Bankruptcy is a very big step. It is not the only way to handle money problems. If your bills are not too big, you may have other choices that do not hurt your credit as much.
Making a Payment Plan: You can try calling the people you owe money to. You can ask if they will let you make smaller payments over a longer time. Many companies will be happy to work with you.
- Other Things You Can Do
- Ask for a lower interest rate on your card.
- Talk to a credit helper at a non-profit group.
- Make a plan for your money to find ways to save.
- Good Things About Other Choices
- They do not hurt your credit as much.
- You get to pay back the money you owe.
- You can learn how to be better with money.
A Real-Life Story: Brenda owed $4,000 to a store. Instead of bankruptcy, she called the store. They let her make a new payment plan that she could afford each month.
Why Is a Lawyer So Important?
Getting Good Advice: Divorce and bankruptcy are hard to understand. The laws can be tricky. A good lawyer, like the Michigan Divorce Attorneys at our firm, can look at your case and give you clear advice. They help you make the best choices.
A Lawyer Helps You: A lawyer makes sure you are treated fairly. They can tell you what will happen with your bills. They can also help with papers and speak for you in court.
- How a Lawyer Can Help
- Explain your choices in a simple way.
- Protect your things and your money.
- Answer your questions about the rules.
- Questions to Ask a Lawyer
- Is filing for bankruptcy a good idea for me?
- How will this change how our things are split?
- What are my other choices?
A Real-Life Story: Before he did anything, Bob met with a lawyer. The lawyer explained how his wife’s bankruptcy would affect who gets to keep the house. This helped Bob make a smart plan.
Extra Insights
Bankruptcy Can Pause a Divorce: When a person files for bankruptcy, the law can pause other court cases about money. This means the part of your divorce about splitting things might have to wait. The bankruptcy case usually has to finish first.
You Must Be Honest: In a divorce or a bankruptcy, you must tell the truth about all your money and all your bills. Hiding things can get you in big trouble with the court. It is always best to be open so your lawyer can help you the right way.
Frequently Asked Questions About Bankruptcy and Divorce
1. If my spouse files for bankruptcy, does it hurt my credit?
It can hurt your credit if you have shared bills that are not paid. If the bills are only in your spouse’s name, your credit should be fine.
2. Can bankruptcy stop child support payments?
No, bankruptcy does not get rid of child support or alimony. These payments must still be made.
3. What happens to our house if one of us files?
What happens to a house can be tricky. A lawyer can look at your case and tell you what might happen.
4. Is it better to file for bankruptcy before or after a divorce?
The timing is very important and can change things a lot. A lawyer can help you decide on the best time to file.
5. Will I lose all my things if I file for bankruptcy?
No, you do not lose everything. The law lets you keep many of your things so you can get a fresh start.
6. How does the court split bills if one of us files for bankruptcy?
The bankruptcy can get rid of the bill for the person who files. The judge then decides what to do about any bills that are left.
7. Can a company make me pay a shared bill my spouse got rid of?
Yes, they can. If your name is on the bill, the company can ask you to pay all of it.
8. What is Chapter 7 and Chapter 13 bankruptcy?
Chapter 7 gets rid of most bills quickly. Chapter 13 is a plan where you pay back some of your bills over a few years.
9. How long does bankruptcy stay on my credit report?
A Chapter 7 bankruptcy is on your report for 10 years. A Chapter 13 is on your report for 7 years.
10. Can we file for bankruptcy together if we are getting a divorce?
Yes, you can file together if you are still married. Sometimes this is a good way to handle shared bills before a divorce.
11. Does my spouse’s bankruptcy stop our divorce?
It does not stop the divorce from happening. But it can pause the parts about splitting money and things.
12. Why do I need a lawyer for this?
The rules for divorce and bankruptcy are hard. A lawyer helps keep you safe and helps you make good choices.
Making choices about money during a divorce is a big deal. You do not have to do it alone. Getting help from a lawyer is the best way to make sure you are doing what is right for you.
Call or text us at (248) 590-6600 for help with your case.
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