What Happens to Joint Property in Bankruptcy?

December 28th, 2012 by Reed Allmand

If you are considering bankruptcy protection as a married individual you may have concerns about joint property and whether or not it can be protected from creditors.  The outcome of your case may depend on the chapter you file, the state you live in, if you file on your own or with your spouse and ownership of property.

If you choose to file bankruptcy you may qualify to file Chapter 7 or Chapter 13 depending on your situation and qualifications.   Each chapter offers exemptions that may help protect marital property.  With Chapter 13 bankruptcy you make payments through a structured scheduled plan based on income that lasts 3 to 5 years.  As long as you continue to make payments you’ll be able to keep your property.

If you file your case jointly, either Chapter 7 or Chapter 13, all property between each spouse becomes part of the filing whether it is owned by one or both spouses.  This includes outstanding debt; meaning both spouses can obtain a discharge and not be liable.  Keep in mind, some states allow married couples to double exemptions or carry a certain amount of exemptions depending on the type of property.

If one spouse files for protection only their debt and property will be part of the case. This may vary depending on the state you reside and whether it is a community property or common law state.  Joint property is defined in a community property state that includes all items acquired during marriage.  Any property acquired before marriage is considered separate property. Common law states allow married individuals to claim property acquired during marriage as separate if obtained by one spouse.

One spouse who files may qualify for exemptions to help protect marital property. Yet, you’ll want to review exemptions available in your state prior to filing.  In some situations, it’s beneficial for both spouses to file to protect joint property.

 

Reference: http://www.thebankruptcysite.org/resources/bankruptcy/bankruptcy-planning/how-joint-property-treated-bankruptcy

avatar

About Reed Allmand

Website

Allmand's vision is rooted in his own financially precarious childhood in Abilene "My father always had difficulty holding a job and supporting our family, so after my parents divorced when I was 12, my sister and I got jobs to help make ends meet," he recalls. "I remember what it felt like as a child to worry that our car would be repossessed or home foreclosed on."

View all posts by Reed Allmand

Subscribe

Subscribe to our e-mail newsletter to receive updates.

FAQ

Why do I need to submit a new wage order when I modify my plan

When we modify your bankruptcy plan we are changing your plan payments. This means that we have to get with your employer and change the terms and amount of your wage order. The only way we can do that is by filling out a new wage order form.  

Learn More
What happens if the stay terminates on my home?

If the bankruptcy stay terminates on your home that means that even though your in bankruptcy, your creditor can pursue all there legal remedies they can pursue if you were not in bankruptcy. This includes foreclosure, and having your house sold and evicting you from your house.

Learn More

Find Location

map
  • Dallas Bankruptcy

    5646 Milton Street, Ste. 120 Dallas, Texas 75206
  • Fort Worth Bankruptcy

    860 Airport Freeway, Suite 401, Hurst, Texas 76054
  • More Locations

Meet Our Clients