How Does Bankruptcy Affect a Spouse

How Does Bankruptcy Affect a Spouse? All The Important Facts & Details

In this article, we’ll discuss the important topic of: “How Does Bankruptcy Affect a Spouse?”

To get protection from the threats of the creditors, many people prefer to file for Bankruptcy. Though this will protect you from the creditor’s threats, it will show up on your credit report. Bankruptcy breaks on your credit report for as much as ten years. But apart from this, a major question that many people have is how does bankruptcy affect a spouse

The answer to this is yes, your spouse may also get affected even when you are filing individual Bankruptcy. It also depends on several factors stating to what extent the Bankruptcy is going to affect your spouse. Some of the factors are:

  • Joint properties or bank accounts
  • The State’s property laws
  • The type of Liquidation that you have filed for help. 

How Does Bankruptcy Affect a Spouse?

If you are filing Bankruptcy as a couple, of course, it is going to affect both your finances. Though the effect will vary based on your finances, both of you have to suffer from the consequences. 

But what will happen when you are married, and you have just filed for Bankruptcy individually? Will it affect your spouse? Yes, it is going to affect your spouse even when you have filed Bankruptcy individually. Of course, it will not harm your spouse’s credit score, but there are other ways. Apart from the mental pressure and other emotional drawbacks, there are other ways of how your spouse can suffer. 

So, how does Bankruptcy affect a spouse in such a case? Here are some of the ways that can impact your spouse due to your bankruptcy filing. 

Joint Accounts:

This is quite logical that if you have a joint account in a bank, loan, lease, or similar others, your spouse also has to suffer along with you after the bankruptcy filing. If you have a joint account with your spouse, your spouse is also equally responsible for the Bankruptcy legally. There is no option of being half responsible because your spouse has not filed for the Bankruptcy. The joint accounts make the spouse also a co-borrower from the creditors from whom you have borrowed finances. 

Applying for Loans:

As mentioned earlier, the filing of Bankruptcy is not going to affect your spouse’s credit report. So, in normal circumstances, the spouse can apply for loans and even get it based on the credit score. But many of the creditors may back out when they find that you have filed Bankruptcy. The info can be easily known when your spouse presents the address where you both stay. 

Family Business Goes for Toss:

If you have funneled for Bankruptcy, you cannot remain your business director until and unless the court does not allow you to do so.  Bankruptcy’s trustees will also try to sell off your business to recover your debts when nothing works out. Thus, if the spouse also had a contribution to the business, it also goes away. But here, playing a bit tricky can help you save the business from selling out. Getting in touch with the right advocate can help you in doing so. 

Assets of the Spouse:

Whether the trustees of Bankruptcy use up the spouse’s jointly-owned assets or not depends upon the type of assets that the spouse holds. If it is furniture and similar items, the trustees may not interfere in it. But if the spouse has bought an expensive car along with you, this can be taken away. If the trustees notice that the spouse is using the car for work purposes, there are chances of reconsideration. If the spouse has a monthly income that can help pay off the debts in the next three to five years, the trustees can consider this. So, the pressure of paying off the debts now comes upon the spouse. 

Personal Disturbances:

If you have a big house, the court and the trustees of Bankruptcy may try to liquefy the property to pay off the debts. Of course, this can cause a personal and emotional disturbance to the spouse. House is made of love and care. When a house is sold out to pay off debt, it hurts. Similarly, due to the bankruptcy filing, the whole focus remains to pay off the debts. In such a situation, the spouse also has to suffer in terms of lifestyle, holidays, and other elements. 


If you think that individual filing of Bankruptcy is just affecting you, you are very much wrong. In the case of joint accounts, the Bankruptcy will directly affect your spouse. But if it not, then How Does Bankruptcy Affect a Spouse?

Even when the spouse does not have joint accounts with you, it can trouble the spouse by offering pressure on him or her for paying off your debts if the spouse is an earning partner. You cannot ignore the emotional breakdown that the spouse can go through seeing the house and other beloved assets and properties getting sold off to pay off the debts. 

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Discolsure: I am not a financial expert and it is highly recommended that you seek out a professional before making any financial decisions. Articles are informational and for educational purposes only.

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