Bankruptcy can be the end of a devastating financial path. While most hardworking Americans avoid this type of turmoil, certain unexpected catastrophes can put a family in turmoil. Medical debt, serious home repairs and divorce can all lead to financial trouble.
Marital assets and their impact on bankruptcy
Married couples bring various assets into a marriage, including real estate, investments and individual property. Since acquired by spouses independently, these assets are generally considered “separate.”
While married, however, the couple will almost always share the acquisition of assets (and debts!) unless the property meets certain criteria. The couple may have serious questions about these marital assets if bankruptcy becomes a reality.
The two most common forms of bankruptcy in the Bankruptcy Code are Chapter 7 and Chapter 13. In Chapter 7, debt elimination, the couple’s unsecured debts are generally erased. This can include medical debt, credit card debt and some forms of personal loans. Chapter 13, however, is debt organization and repayment. The couple will have a certain amount of their unsecured debt eliminated and embark on a payment plan to clean off whatever remains. In both forms, the couple must list all marital assets and debts the court will evaluate.
Every situation is unique
Married couples and individuals alike have probably heard anecdotal evidence from friends or read stories online about bankruptcy. In truth, every bankruptcy is different – following its own path. For this reason, you must discuss your situation with an experienced bankruptcy attorney. A lawyer can provide guidance and advice specifically tailored to your unique circumstances. It is important to remember that the court will evaluate all marital, shared or joint assets through the bankruptcy process.
