How Will My Bankruptcy Affect My Spouse?
California law creates some unique considerations
By Judy Malmon, J.D. | Last updated on January 10, 2023Use these links to jump to different sections:
Filing for bankruptcy is a very personal decision, and of course should never be entered into lightly. As you consider entering this process, if you’re a married couple, you’ll also need to decide whether you‘ll seek bankruptcy protection individually or jointly with your spouse. Although bankruptcy law is federal law, there are some unique laws in California that govern how your bankruptcy will affect your spouse.Community Property

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If you’re filing for bankruptcy, chances are your credit score is already trashed, and while bankruptcy will allow you to begin to rebuild your credit, note of your bankruptcy will remain on your report for 10 years. If there are community debts that have gone unpaid, chances are the impact has already affected both spouses. However, it’s possible that your spouse has maintained good credit and will be able to continue to do so while you are in the process of rebuilding, which can also help restore your joint credit more quickly. Chapter 11 and Chapter 13 bankruptcy filings—especially reorganizations—are extremely difficult to navigate on your own, Blumenfeld says. “It’s possible to do a Chapter 7, but think of it like another language. Or a brain doctor trying to do a foot surgery. I appreciate anytime a client researches and becomes familiar with the process, but I wouldn’t even tell a friend, ‘You can do it on your own.’” Chapter 11 bankruptcies are the most lengthy, and often take 14 to 18 months to be confirmed. “And that’s assuming they confirm,” Blumenfeld says. “The majority don’t; less than 10 percent go through. They seem to go on forever and this is in a good economy, where the courts aren’t overwhelmed.” Because of the time involved, bankruptcy attorneys typically charge hourly fees for a Chapter 11, while 13 and 7 are more often a flat fee. As Blumenfeld contests, bankruptcies are complicated and circumstantial. An experienced bankruptcy attorney will be able to sort through issues of who owns what, how your debts will be allocated, and how best you can move forward to rebuild your financial stability. For general information on California bankruptcy, bankruptcy cases, bankruptcy lawyers, Chapter 7 bankruptcy, bankruptcy exemptions, the bankruptcy code, and bankruptcy trustees, see our bankruptcy overview.What do I do next?
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