Spouse Received a Bill from My Bankruptcy: What to Do Next
It can feel like a gut punch when you’re already dealing with the stress of bankruptcy. Then, unexpectedly, your spouse received a bill related to *your* bankruptcy filing. It’s confusing, and it’s normal to have immediate concerns and questions like, “Can my spouse’s income be affected?”.
The situation might seem pretty bad. But there are reasons why this might happen, and ways to handle this, offering you both a potential path towards a fresh start.
Understanding Why Your Spouse Received a Bill
It’s easy to jump to conclusions, although the legal reality is usually more defined. Generally, a non-filing spouse isn’t automatically included in the bankruptcy protection if only *you* filed. The U.S. Courts website describes that a discharge varies depending on what Chapter you file.
This is one of the common misunderstandings when only one spouse declares bankruptcy. Collection efforts can continue against the non-filing spouse in non-community property states, unless something otherwise has been agreed to in your state. Debt obligations may still be pursued, even for a married person.
So, this might mean that your spouse received a bill from your bankruptcy due to jointly held property. This frequently is what the cause for your situation could be.
Joint Debt vs. Individual Debt
If your spouse co-signed a loan or credit card with you, that’s considered joint debt. The credit card company or other creditor can pursue your spouse for the full amount, even if *your* responsibility was eliminated in *your* bankruptcy cases. A bankruptcy trustee may even get involved.
Review your credit reports and the original loan documents. This will clarify who is legally responsible for each debt, whether you filed for bankruptcy jointly, or you filed bankruptcy individually.
Community Property Considerations
Things change if you reside in a community property state. All property jointly owned (and debt) acquired during the marriage is considered jointly owned, even if only one spouse’s name is on the paperwork.
This is one of those major situations. Even a non-filing spouse’s interest in the community property can become part of your bankruptcy filing when this happens.
My Spouse Received a Bill from my Bankruptcy After Chapter 7
Chapter 7 bankruptcy is designed to eliminate most of your individual debt; that said, you need to get through all of the filings properly. A trustee assigned may even get your tax refund from a year in which the bankruptcy was filed. See Chapter 7 – Bankruptcy Basics (United States Courts).
But this process doesn’t extend protection to co-signers or joint account holders. Creditors hold the right to go after anyone responsible for debt obligations, and it’s best to stay educated and current on this status.
Also consider reaching out directly to your bankruptcy lawyer. They can provide legal advice and help navigate your next steps in these bankruptcy cases.
What Happens with Shared Bank Accounts in Chapter 7?
Here is some of what can happen in the case of a joint bank account:
- Shared bank accounts can become part of the bankruptcy estate, but can potentially be kept out depending on other factors.
- Funds might be “exempt” (protected) up to a certain amount depending on a number of factors and state law. This could involve showing the bankruptcy court how the funds were used.
- Your spouse might have to prove the origin of funds in a shared account if your legal team challenges or asks questions.
Consider that you will be questioned, especially about any property jointly owned. It is always smart to talk to a bankruptcy attorney early for any bankruptcy cases, so that you will have debt relief when all is done.
Handling Bills after Chapter 13 Bankruptcy
Chapter 13 is very different because it involves a repayment plan. Filing Chapter 13 allows someone in bankruptcy to restructure their debts for 3 to 5 years.
Typically, any remaining *dischargeable* debt is wiped clean, giving the married couple a fresh start, but there are a lot of rules. If debts that you and your spouse *both* had in the payment plan and weren’t fully paid off, those debts can be billed to your spouse, as noted at Chapter 13 – Bankruptcy Basics (United States Courts).
It’s tricky. Even if bills came to you that were paid off during this bankruptcy, you could contact the party who sent the bill to tell them they are breaking laws, specifically those involving the codebtor stay.
Understanding the Automatic Stay
The automatic stay in bankruptcy, (11 U.S. Code § 362(a)) puts most collection actions on pause, when filing. The purpose is giving you temporary relief and helps you manage where to go from there. This is key when it comes to achieving debt relief and financial situation planning.
Although, this protection *generally* only applies to the person who filed for bankruptcy. Review the automatic stay guidelines in section 362(a). There you can verify who qualifies, and how the stay stops creditors from collection.
Protecting Your Spouse’s Credit
A spouse that did not file bankruptcy has assets that may not be affected. In many situations, if a spouse is left off a bankruptcy filing, that will help the individual. It can potentially allow the individual who did not file to build up credit and start the road to improved credit reporting.
Here’s what to think about:
| Potential Impacts | Ways to Address It |
|---|---|
| Joint debts will appear as delinquent if not fully paid on time, even during bankruptcy. | Talk with your trustee, if applicable, to get the details. |
| There are opportunities if a spouse is not on the bankruptcy bankruptcy. | The debt of the other spouse can build up with good money management. |
| Your bankruptcy will *not* appear directly on your *non-filing* spouse’s credit report. | Be sure to communicate and stay involved with your creditors and your trustee (when necessary). Open lines of communication with your creditors and the bankruptcy trustee assigned can help a non-filing spouseâs credit report. |
Practical Steps to Take
Let’s get practical. If my spouse received a bill from my bankruptcy, I’d work with them to do a few things, while looking into every aspect of our financial situation, such as my spouse’s income, as well as factors including community property laws.
- Review Everything Together: Gather all bankruptcy documents, bills, and credit reports. See and know how your spouse might be involved, based on debts and property joint ownership. Look into any and all personal property concerns as well.
- Talk To Creditors: Even if only to inform creditors of your bankruptcy petition, communicate openly with them. It can make a huge impact in many cases, as debt obligations need to be managed effectively. Communication will allow you to see if creditors pursue payments they should not be pursuing.
- Get professional support, as required: Consulting a bankruptcy attorney helps to make the most of bankruptcy relief, especially to prevent making any unnecessary decisions, such as any major impacts on disposable income. The lawyer may provide a contact form for consultation.
Communicating with Creditors
It can be difficult to communicate with people from financial services. Don’t delay speaking up if a debt should have been removed or addressed in the bankruptcy claim. If a creditor or debt collector contacts you and says your spouse must pay a debt after bankruptcy has eliminated it, you should report them.
Tax Implications
Even the IRS gets involved here. While in bankruptcy, a taxpayer generally may not get any tax refunds, which relates to disposable income as well.
In community property states, a bill could technically be sent, although they should consider this for debts in a pre-bankruptcy. Common law considerations also exist, in which each person owns what is in their name only, even if you are a married couple.
IRS Publication 908, the Bankruptcy Tax Guide may help, or talking to your legal counsel. Be sure you read and go through those documents to support and plan this journey the best possible. The “means test” is also part of this, for Chapter 7 filings, to see if you qualify.
Longer-Term Financial Planning
A lot of success on the other end comes back to good financial practices after bankruptcy.
While setting up separate finances can be unpopular, it can come into consideration. For a married couple who is having to deal with joint property because one spouse’s debt impacts another, that can add a lot more challenge.
One might even decide after the bankruptcy to consider ways to work in the future to prevent any concerns of filing bankruptcy affect the other person. Having truly separate finances and not co-signing anything would be a path to consider, as a married person.
Conclusion
It is common for this issue to arise, since collection activity can sometimes still come after filing. Filing and managing creditors is an actual job to do right, so it requires proper care.
Although, if the collectors break certain laws that can get costly to them, as they are also being watched on what’s allowable during the situation. If a debt collector is illegally contacting a spouse about your bankruptcy debt, then report it immediately, whether it is from credit cards, or other types of debt.
Although it may be disheartening at first, and even feel confusing, there are solutions. If my spouse received a bill from my bankruptcy, I’d check debt responsibility as an immediate task and contact creditors as needed. Getting on the same page makes everything a lot easier for my team moving forward.
To discuss your financial situation and how it might impact your spouse, schedule a consultation with The Law Office of William Waldner today.