I, Robert Manchel, Esq. am the author of this article and Certified as a Consumer Law Bankruptcy Attorney by the American Board of Certification, which is accredited by the American Bar Association. If you wish to obtain additional information about bankruptcy, please call my toll free number 1(866) –503-5655 or visit my web site at  http://www.bankruptcylawyer-nj.com.

An obligation to pay debt is based on an agreement between the individual(s) and the creditor. A spouse is not responsible for the debt of the other spouse solely because of the marriage. If only one spouse contracted to pay a debt, than only that spouse is responsible for the debt. If both spouses are obligated and have contacted to pay the debt, than both spouses are responsible for 100% of the debt.  If both spouses contracted to pay the debt, the creditor may pursue and collect any percentage of the debt from either spouse, but never in excess of the total amount due. In other words, the creditor may get 60% from one and 40% from the other, or 20% from one and 80% from the other spouse.

If two people wish to file for bankruptcy together, the two individuals must be married. In general, it is not necessary for both spouses to file for chapter 13 or 7 protection. When evaluating whether one spouse should file individually or jointly, each person should carefully consider their entire financial circumstances, independently, and together with the other spouse. 

In a chapter 7, if the filing party meets all of the bankruptcy code criteria, the filer will eliminate “certain” dischargeable debt. If the non filing spouse, owes a joint debt with the filing spouse, the non filing spouse will not eliminate or discharge any of his/her debt. This means that the creditor may pursue the non filing joint debtor spouse for all of the debt, which he/she is responsible to pay.

Immediately upon a chapter 7 or 13 bankruptcy filing, the “bankruptcy stay” prohibits any and all creditors from commencing or pursuing any action against the filing party. In a chapter 7, the court will typically permit the creditor to pursue the non filing joint debtor spouse in connection with any balance due.

New Jersey residents can obtain answers to questions regarding foreclosure resolution and bankruptcy laws by visiting http://www.bankruptcylawyer-nj.com

Unsecured debt is debt that is not secured by property, such as the following: credit card debt; personal loan; and, health care debt, etc. 

The following pertains to a chapter 13. In a chapter 13, the filing party must make monthly payments to a trustee. The amount and number of the payments are based on numerous factors. Also, the determination as to which creditors are entitled payment of funds from the monthly trustee payment, is based on numerous factors. In certain circumstances, the filer must or may pay all or a portion of the unsecured debt, through the monthly trustee payments (bankruptcy plan).

In a chapter 13, the filing party is required to treat all unsecured creditors equally. Therefore, a spouse filing individually, may not decide to pay 100% of the debt to one credit card company and 5% to another credit card company. Typically, if one unsecured creditor is paid 100%, than all unsecured creditors must be paid 100%. If the unsecured creditors are receiving less than 100%, each creditor must be paid on a pro rata basis.

Immediately upon the filing of a chapter 13, the “stay” and “co-debtor stay apply. The “co-debtor stay” initially prevents any creditor from pursuing the non filing spouse, who owes a joint debt with the fling spouse. However, the court will permit a creditor to pursue the non filing joint debtor spouse, if the filing spouse does not pay 100% of the debt to the unsecured creditor. In other words, if a chapter 13 Joint debtor spouse, who files individually, pays less than 100% to an unsecured creditor, the creditor can apply to the court for permission to proceed against the non filing joint debtor spouse, for the balance that will not be paid through the trustee payments.

An individual would file a chapter 13 for the purpose of saving a house from foreclosure. Typically, if the mortgage(s) and note(s) are in the name of both spouses, and they are unable to modify any mortgage and/or note, only one spouse need file to save the house from foreclosure. Typically, if the mortgage and note are in the name of one spouse, only that spouse would need to file to save the house. This interpretation may vary.

Typically, an individual would file a chapter 13 for the purpose of saving an auto from repossession. Generally, if the financing, is in the name of both spouses, and they are unable to modify the financing agreement, only one spouse would need to file to save the auto from repossession. If the financing is in the name of one spouse, typically only that spouse would need to file to save the auto.

Disclaimer: The bankruptcy laws are complex and may be applied differently, in each case, and State.  There may be numerous exceptions and variations for each law and rule. Do not rely on the information provided in this article. If you are considering filing for bankruptcy protection or have  foreclosure issues, you should consult with an experienced  lawyer. We are a debt relief agency. We Help people file for bankruptcy relief under the bankruptcy code.

© 2008 Robert Manchel