Bankruptcy and Marriage

Posted by Shu Zheng

Many people going through divorce are under financial stress, they often think about the possibility of bankruptcy as a way to control of everything.

There are some debts that don’t get discharged in bankruptcy:
· Alimony and child support
· Some obligations for property settlement in divorce
· Student loans
· Debts arising from fraud or theft
· Criminal restitution

A question arises when it comes the time that one spouse has to declare bankruptcy, should he or she file it alone or together? The decision depends on various factors: types of property, the amount of community debt involved, and how the property is held.

Filing together eliminates the separate debts of the both spouses and all the jointly-held debts. Filing alone leaves the non-bankruptcy spouse still liable for his or her share of joint debts, but wipe out the spouse’s separate debts and his/her share of the joint debt. And if you are legally separately, have divided your property, and taken care of all the financial considerations, you best option may be to have your spouse go it alone. If all the debts were incurred before you were married, there is no point to having you both file.
Thus, is you would have decided to file bankruptcy separately after marriage, keep separate credit reports with the spouse, because joint credit applications will show up on both of the couple’s credit reports, and even when one spouse is just an authorized on the other’s credit card.

Sources:
1. http://bankruptcy-law.freeadvice.com/consumer_bankruptcy/spouse_bankruptcy.htm
2. http://www.bankrate.com/brm/news/DrDon/20050427a1.asp
3. http://www.divorceinfo.com/bkrcybankruptcy.htm

Avoid Bankruptcy

Posted by Shu Zheng

Some people think that it is easy to file bankruptcy, but in fact, it is a life-changing event that will cause lifelong damage.

There are two types of bankruptcy. Chapter 7 Bankruptcy, which is total bankruptcy, stays on your credit report for 10 years. Chapter 13 Bankruptcy, more like a payment plan, stays on your credit report for 7 years. In 2005, the new laws made it more difficult to file Chapter 7 bankruptcy. With Chapter 13 bankruptcy as the other option, you may end up paying 25% - 75% of your debts. Bankruptcy is for life. Loan applications and many job applications ask you if have filed for bankruptcy.

Most bankruptcy can be avoidable. There are four ways to handle it:
· Sell assets to pay debt.
- Selling your assets may be inconvenient to you, but it is worthwhile to do so rather than ruining your credit.
· Pay your way out of debt.
- You can cut your expenses or increase your income.
· Negotiate with your creditor.
· Consumer credit consulting.

Sources:
1. http://www.americandebtcontrol.com/bankruptcy_alternatives.htm?gclid=CJfD6OfP0JkCFYZM5Qodaw3Muw
2. http://credit.about.com/od/debtmanagementsolutions/tp/how-to-avoid-bankruptcy.htm
3. http://www.daveramsey.com/the_truth_about/bankruptcy_3018.html.cfm