Married couples facing financial difficulties have the right to file bankruptcy
jointly. However, the same is not true for unmarried cohabiting couples.
For couples who have co-mingled their finances but who are not legally
married, filing bankruptcy offers it’s on set of problems that require
unique strategies. Let’s take a look at a few facts:
Joint Credit Accounts
If you and your partner opened a credit card account together, you are
both financially responsible for repaying the debt. If one of you files
bankruptcy, the other may face collections actions depending on what type
of bankruptcy has been filed. If
Chapter 7 bankruptcy has been filed by one party in the relationship, the creditor will have
the right to go after the non-filing debtor almost immediately. But in
Chapter 13 bankruptcy , the credit card company will need to refrain from attempting to collect
on the debt until after the Chapter 13 bankruptcy case has been closed
which could take three to five years.
Holding Onto Secured Property
If you and your cohabiting partner want to keep property which is attached
to a loan, this will require careful pre-bankruptcy planning. For example,
it may be more difficult to hold onto a vehicle with only the filing partner’s
name on it, if that filing partner cannot afford to pay the car note in
the bankruptcy. Even if the non-filing partner has the cash, they won’t
have the same type of leverage as a spouse would have in bankruptcy. Because
of this, the cohabiting couple will need to work closely with the bankruptcy
attorney to negotiate some type of settlement with the creditor.