Bankruptcy & Marriage: Part Two

Does Bankruptcy Affect a Spouse's Credit Score?

What affect does bankruptcy have on the other spouse if they separate prior and does the separation need to be a legal one?

Brenda

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Your question leaves out a lot of important information.

Was the bankruptcy filed jointly or only in the name of one spouse? Did the petition seek to discharge joint debt or only one spouse’s? What was the legal status of the marriage at the time of the bankruptcy?

It seems that you had an informal separation prior to the bankruptcy filing. So to answer your question I would have to know if your ex-husband tried to discharge joint debt – debt you applied for, co-signed for or which was based on your credit rating. If he did, the bankruptcy will likely affect your credit rating as well as his.

If he solely discharged his own personal debt, your credit rating will be unaffected, regardless of your marital status.

If you had a formal separation, consult your attorney to see how martial assets and liabilities were to be divided. If your ex-spouse violated the terms of your separation agreement, you might be able to clear up negative references due to your ex-husband’s financial difficulties.

This might be harder to accomplish than you might think. Many lenders will hold whatever spouse they can find with assets responsible for bills run up by either spouse during the marriage regardless of the terms of the divorce decree.

Check your credit report and see what it says. If your credit was damaged by your ex-spouse’s actions, consult a matrimonial lawyer in your area to see if you have any recourse. Do the same if a creditor is trying to collect on a debt run up by your ex-spouse that you had nothing to do with.

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The marriage was still intact and no legal separation existed.

The bankruptcy listed only the husband's debts and we both kept separate accounts, credit cards, etc. from the start.

There were no joint accounts or debts. Everything was in one or the other's name.

Thanks for your assistance.

Brenda

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While not necessarily the most romantic arrangement, a married couple setting up their financial affairs in this manner does save a lot of trouble if something goes wrong.

Read this comprehensive article about the changes caused by bankruptcy reform.

For a consultation with a local bankruptcy attorney, click here.

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