I was recently interviewed by Karin Price Mueller for her NJMoneyHelp.com column. The theme of the article is what happens when one spouse files for bankruptcy. Specifically, one of Ms. Price Mueller’s readers posed the following question:
My husband wants to declare bankruptcy. He has $25,000 of credit card debt in his name alone. We have both of our names on a mortgage and another credit card, but that has no balance. How would his bankruptcy affect my credit?
While you can read the entire column here, I will point out a few key points.
- The wife’s credit score will not be affected by the husband’s bankruptcy.
- The person filing for bankruptcy, and only the person filing for bankruptcy, receives both the consequences of that action and the benefit from it.
- Regardless, one’s credit score can quickly rebound after bankruptcy. Of course, this is only possible after properly navigating the bankruptcy process.
- Couples may have to address other household financial issues.
Bankruptcy Can Be Confusing
With the aggressive advertising from debt consolidation and credit repair companies, the uneducated consumer may not take the right path to deal with financial problems. They like to tout that bankruptcy will ruin your credit. I have a different philosophy which comes out clearly in this quote from the column:
“But don’t be guided by fear. Get the facts and get educated,” she said. “Facts do not come from the internet, they come from good legal counsel. So get yourself an attorney and get sound advice, and then, don’t be afraid to say goodbye to debt and hello to a financial fresh start.”
If you have more questions about what happens when one spouse files for bankruptcy, I am happy to help you. Likewise, contact me if you are facing financial hardship.