How to Talk to Your Spouse About Bankruptcy

It is not unusual that the spouse of a financially distressed person is unaware of the financial difficulty of the other spouse. Reasons may include one spouse controls the finances, one spouse runs a small business, or the couple keep their financial affairs separate. So, the question often arises how to talk to your spouse about a possible bankruptcy filing.

First- Discuss It With Your Bankruptcy Attorney

If you are concerned about what the other spouse’s reaction may be, the best course of action is to make an appointment with an experienced bankruptcy attorney. Come prepared with a list of debts and total debt. Tally the monthly minimum payments necessary to keep a creditor from filing a lawsuit. Separate the debts into
three categories. One category is the debts one spouse is solely liable. One category is the debts the other spouse is solely liable. The third category is the debts the spouses are jointly liable on. List the assets in three categories. One for assets solely owned by one spouse. One for assets solely owned by the other spouse.

How do you know if you are jointly liable? When it comes to credit cards it is often difficult to determine if the spouses are jointly liable. Both spouses are cardholders but only one spouse may be contractually liable. Generally, people do not have copies of the cardholder agreement. If not, look at the credit reports for each spouse. If a spouse is contractually liable the credit card debt should be on the credit report. If a spouse is not contractually liable, the credit card debt should not be listed on the credit report. For a free credit report go to www.annualcreditreport.com. For medical bills, in Colorado, both spouses are usually jointly liable for the debt under the Family Purpose Doctrine.

Second- Determine If Only One Spouse Needs to File Bankruptcy

In many cases, if a spouse has little separate and joint debt the spouse can avoid filing bankruptcy. In that case the non-filing spouse will be eager for the other spouse to file bankruptcy in order to better their financial future.

Third- Discuss It With Both Your Spouse And Your Bankruptcy Attorney

Once you have determined whether both spouses or just one spouse should file bankruptcy, then a consultation with both spouses and their bankruptcy attorney is advisable. At that time the bankruptcy attorney will analyze your options, Chapter 7 or Chapter 13, or debt settlement. The bankruptcy attorney will recommend the option that is in your best financial interest. Then, both spouses will agree on the best way forward for them and their family.

I often tell clients to look three to five years into the future. Is it better to get rid of debt now and start saving for the future, or continue to pay on the old debt for the next three to five years, with no savings?

Martin Long LONG & LONG P.C.

www.denverbankruptcylawyer.net.