Filing for Bankruptcy without Your Spouse in Tacoma
I get one question all the time from married couples who have accumulated debt during their marriage. Do both of them need to file bankruptcy in Tacoma or can just one spouse file the bankruptcy. Many couples want to save one of their credit scores. Often all the debt was taken out in one spouse during the marriage.
It is certainly possible for just one spouse to file for bankruptcy in Tacoma. In a community property state like Washington, the benefits of one spouse filing are potentially more advantageous that it would be in a separate property state like Oregon.
Before we get into the weeds, it is important to understand what it means to live in a community property state like Washington. Basically, being married in Tacoma, Washington means that whatever debts you incur and whatever assets you purchase while you are married are joint. There are a few exceptions to this rule, but usually, both of you jointly own all of your assets and are jointly responsible for the debts.
If you file for bankruptcy in Tacoma, the automatic stay stops all collections against you plus it stops all collections against the marital community. This means that if you file for bankruptcy the creditors must stop collection activity against you and anything that could impact your marital community which is to say your spouse.
While your spouse is technically still liable for the debts that existed before the bankruptcy case was filed, the bankruptcy discharge protects all marital assets obtained before and after the bankruptcy filing of the non-filing spouse.
This means that while the non-filing spouse is technically still liable for the debt, the creditors cannot satisfy the debt through any marital property. This includes wages and bank accounts of either spouse. So the debt still exists for the non-filing spouse, the creditor just can’t try to collect it anymore.
So what can a creditor do to try and collect on a debt against the non-filing spouse? They can only collect from the non-filing spouse’s “separate property”. Generally, this is the property that the non-filing spouse owned prior to getting married. Because most married people do not have much separate property, the creditor is rarely going to have a chance of collecting anything from the non-filing spouse,
In essence, the non-filing spouse gets protection from the bankruptcy discharge entered in the filing spouse’s bankruptcy case for all the debts discharged in that case. The only debts that would remain collectible would be the ones that the non-filing spouse racked up prior to the marriage.
Remember that it is the existence of the “community” that makes the debts non-collectible.
Once the community terminates through either through divorce or death, the creditors are then free to pursue collections against the non-filing spouse. So the debts are permanently non-collectible as long as you stay and as long as the non-filing spouse predeceases the non-filing spouse.
Please reach out to us if you have any questions about filing bankruptcy without your spouse. I would be happy to connect with you by phone. We would also be happy to arrange an appointment at one of our Washington offices in Tacoma, Seattle or Vancouver.