Married couples facing tough financial decisions must also face eachother. Here in California, we are in what is called a community property state. That means that income earned during marriage and debts incurred during marriage are part of the marriage community. In contemplating bankruptcy, couples must know that the act of filing a bankruptcy case creates an estate for the purposes of liquidation under Chapter 7, or reorganization under Chatpers 13 or 11.
The bankruptcy estate consists of all the assets and debts of that estate. So, your spouse’s income, expenses and debts will come into the bankruptcy case even if they do not sign the bankruptcy papers. The bad news is that you’re in this together. The good news is that you can also rebuild your credit quicker after bankruptcy.
Depending upon how the assets of your community estate are set up, will depend on how you should best proceed in bankruptcy. So, talk to your spouse first about your finances and set a goal for yourselves. Once you’re teamed up and have your goal in mind, consult with your tax professional, financial planner and your local bankruptcy lawyer to determine which direction is best for you. There are many solutions to your current situation and the best strategy is to stay united and enlist help from several professional resources. Most professionals will consult with you for free, so take their advice and then make your decision from a well informed position.