Can spouse file by herself and NOT claim my income???

[seanp951]

My wife and I are considering BK.

HEr credit is worse than mine. I make all the income in the household. She is a stay at home mom.

She has numerous credit cards..I am a joint account holder on only a Coiple of them...the majority of our household credit card debt was taken out in her name alone.

I know when she opened some of the accounts, they ask about household income..and I know she listed spousal income on the apps...but I never signed onto the accounts, they are hers.

Can she file bankruptcy by herself? I know people can file separately....but if she does that, will they attribute household income to her, or since she is not working, will they treat her as having zero income?


It would strategically be better if she could file BK, wipe out a lot of our household credit card dbt, but I don't, then my credit would stay good....

Thanks

[LadyInTheRed]

All of your income will be included in the first part of the Chap 7 means test to determine whether household income is above or below median. In the second part of the means test, any of your income that is not contributed to the household would be deducted when calculating disposable income. If she doesn't qualify for a 7, what you don't contribute to the household will also be deducted when determining whether her Chap 13 plan is 36 or 60 months and when calculating the plan payment.

You can see how it works by looking at the forms:

Chap 7 means test: http://www.uscourts.gov/uscourts/Rul...B_22A_1210.pdf
Chap 13 calculation of commitment period: http://www.uscourts.gov/uscourts/Rul...B_22C_1210.pdf

[seanp951]

In our situation, all of my income goes into the household...I don't have alimony or child support or anything like that. Everything I earn stays within our household....we are just crazy in debt....however most of the unsecured credit card debt is in her name. I was wondering if it was possible to file bankruptcy under her name and effectively wipe out most or all of our credit card debt, but not have the bankruptcy be on my credit report. That way we would still have me earning the income with a good credit score....and while her score would take a hit....it wouldn't ruin us financially as a family since one of us would have good credit.

The house is under my name and I have student loans..... But most of the credit card debt is under her..we have like 75k in credit card debt and don't see any real way out of it aside from BK..... We have kids, and my wife has limited earning power.....If she went back to work, what she earns would be spent on daycare....so itis better for us, and our kids, that she not work.

How much can a person expect their credit score to drop by once they file BK? And does a 13 stay on your record 7 years from when u file or from when the 5 year plan is done? If ita the latter...we would have a BK on our credit report for 12 more years!

[LadyInTheRed]

It sounds like all of your income will be included as household income if she files alone.

A 13 is on your credit report for 7 years after filing. The law actually allows it to stay for 10 years, but from the experiences of people here, it gets removed in 7.

If your wife files alone, her BK will not show up on your credit report. But, if you have any separate property, the creditors may be able to go after your separate property to collect community property debt. Debt incurred during marriage for the benefit of the community is community property debt regardless of whose name it's in. I don't think it is very common for creditors to go after a spouse for debt that is not in his name, but it is a possibility you should be aware of. From what I understand, community property will be safe from collection if community property debt is discharged in her bankruptcy. Check with an attorney to make sure I've got all of this right.

My credit score dropped from 735 to 680 after filing. It might have gone down further, but I think it helped that I wasn't 30 days late on any payments before filing. Your credit score should not be among your biggest concerns right now. A low credit score will not ruin you financially. It will recover. It's best to learn to live without credit any way. It seems if you are going to have to live through a Chap 13, you might as well get a real fresh start and get all of your debt discharged.

How much debt do you have in your name alone?

[debee]

The only thing I have to add is that all of the community property (both halves) at time of filing would become property of the estate. You would need to exempt it (using the exemptions allowed a single filer) in order to keep it out of the trustee's hands & prevent it's sale in a ch7.

Some stuff isn't community property in CA. For instance, property that you already owned prior to the marriage, any inheritance you may have rec'd during the marriage, and I forget what else - any gifts you rec'd during the marriage.

Post-bk, all the new community property acquired is protected and your creditors could not go after that stuff. Any of your creditors (at the time of filing if you do not file) would only be able to collect against your separate property, and not against the community property.

ETA: The protection conferred on the community property despite the fact that only one debtor files only lasts as long as the marriage. Your wages are considered to be community property. So if your wife files bk and receives a discharge, they cannot be garnished to satisfy prepetition debt. But if you get a divorce, then they are up for grabs.

[seanp951]

So my credit score really won't change that much after filing BK?

I always assumed if I Was at 700 before filing it would be at 500 after...

I just checked my score today...677 according to experian. Not great, but not terrible. But with 75-80k in credit card debt and an 80k second we could wipeout a 13 might be a good idea in the long run, we would still b upside down but not much. Our first is 300k....the house is valued at 250 now. With the second gone, given the rents in our area, we could rent it out and profit if the second was gone.

Maybe I'll just file jointly.... My fear was filing would ruin my credit forever....but it's true..who cares what my credit is...

Only thing I'd like to do is get at least one newer car before the 13 so one car would make it all the way throughh the plan without any repair issues.

[woeisme]

definitely plan out things before filing a CH 13. Cars are very important, just keep your payments at or below the allowable amounts (you can look up the exact amts on here by searching posts, but it's something like $450 for 1st vehicle and $950 total for multiple vehicles). If you are in a 5-year CH 13, it comes off the credit reports 2 years post discharge (7 years). We filed less than 4 years ago and my equifax credit score was 653 when I checked a few months ago, although everyone's conditions are different, I imagine the credit card debt and second mortgage are already hurting your credit score, and being out of debt in 5 years will be much more important than a score in the long run. If your wife qualifies for a CH 7, you might want to take the chance on her filing a solo 7 and see if her creditors come after you for the post-marital debt, but if she's going to have to file CH 13, you are probably going to be a lot better off filing jointly. I was in the same situation, most of the debt in my name (although in my case I'm also the majority wage-earner) so we explored the option of a solo BK, but when it became clear that we had to do a CH 13 instead of a CH 7, we filed jointly to get rid of all debt including hubby's much smaller amount since he already had crappy credit, which is why the debt was all in my name since he'd defaulted on about 10K worth of debt a long time back and had no credit. The CH 13 looks at joint disposable income when computing payment amount, so might as well eliminate all joint debt. In our case he had no credit to ruin, in your case you could try to keep your better credit score, but the cost is the worry about whether or not her creditors will just come after you next AND the possibility of stripping the 2nd which is in your name which is the biggie in my book, I mean is your credit score really worth 80K?

[keepmine]

Why do you think you'd have to file a Chapter 13?
Nobody can say for sure until, you fill out schedules I and J to determine if, you have sufficent monthly disposable income to fund a 13.
O course, line up dependable transportation prior to filing any chapter of bk. Most bk lawyers give free of low cost intial consultations. Speak with 2 or 3 and get all of your options explained.
Also. a credit score post bk is pretty meaningless in my opinion. Reason is, many lenders won't touch you for some period of time post bk if you have a bk showing on the public records section of your credit report regardless of how high your score may be.
Me, I got turned down for a car loan from 1 bank and 1 CU due to "recent bk". When I applied, I was about 6 weeks short of the 2 year mark. They said they required 2 years post filing before they'd make a loan to someone with a bk. My credit score and income was acceptable.

[merime]

I don't know your exact situation , but I think I have some similarities. All the debt was in my name only. The only thing my husband and I jointly own is the house. When I got sued we moved all the savings and checking accounts out of my name. It has been over 5 years. He still has credit over 780!!! I don't bother with mine as I have given up on the whole credit nightmare. I will add that filing a chapter 7 was an option, but my husband decided against it. We live in NC and wages are not garnished. The attorney said we qualified for a chapter 7 , but I didn't believe him. My husband makes over $85,000 with 0 debt. It was torture at first, but now life has moved on. Its my debt , so it is not going anywhere. I know what its like to be scared. Just do not let it take over your life. Believe it or not you really really are gong to survive this. You do have to be sure about yoiur decisions. In my case to get a settlement would have cost me in taxes. I even tried working, but with an up in tax bracket it actually cost me $1,000 in taxes to work too. Now that I am not employed all the creditors have backed off. i do coupons and live on cash and guess what-life is not that bad. Try not to let creditors rule your life.

[NewPage]

My situation is pretty much the same as yours, except my husband and I have no joint debt outside the house and HELOC. His income counted on my petition, as did his bills.