Before You Say “I Do”: How Your Future Spouse’s Credit Affects You

You might wonder why someone with virtually no debt and with good credit would contact a bankruptcy attorney. Ah ha, when that person is considering marrying someone who’s got credit problems.

Thus, if you’re looking to get married to someone who’s dodging creditors, how is bankruptcy going to affect you?

There’s good news and bad news to my answer. The good news is that you won’t wind up owing your future spouse’s creditors, but the bad news is that if you’re going to live together and share expenses, then it might actually feel like you owe them. (Hint: your spouse’s creditors will be calling your house phone from 8 am to 9 pm every day if the accounts have gone into default.)

In the bankruptcy context, how will your future spouse’s bankruptcy filing affect your own credit rating. The answer is that it won’t affect your credit rating at all. In other words, it won’t be considered a “public record” on your credit report.

The interesting part however comes when someone with debt problems is considering marriage. The Bankruptcy Code (since the laws were changed in 2005) requires you to disclose total household income in order to see if you qualify for Chapter 7 relief. This is the Means Test inquiry that I’ve written about before.

Therefore if your spouse files a bankruptcy case, he or she would have to disclose your income as well (even though you are not the one filing for bankruptcy). At the same time though, your name will not appear anywhere on your spouse’s bankruptcy petition or schedules.

So, the bottom line is that your credit rating won’t be affected and your name won’t be listed on your spouse’s bankruptcy paperwork.

If your spouse is required to file a Chapter 13 case, where there’s a 3 to 5 year payment plan, then there should be sufficient disclosure to the Court as to the fact that you may have your own credit obligations as well. In other words, you and your spouse will want to propose a reasonable Chapter 13 payment plan that takes into account the fact that you may have car loans, student loans or credit card payments of your own.

If your future spouse has financial problems, then quite often, these are problems that can be resolved with a bankruptcy filing. And often, it’s best to fix the problems prior to marriage.

Here’s why, and this is the area that some people simply don’t understand. I’ll give an example. Let’s say that John is single and makes $35,000 a year and has $25,000 in credit card debt. If he’s considering getting married in one year to Mary, who also makes $35,000 a year, then he should seriously think about filing his bankruptcy case now, rather than later on. Why? Because he’s likely eligible now for a Chapter 7 filing (because the current income cutoff for Chapter 7 in Pennsylvania is $47,000 in gross income). If he waits until he gets married, then the income cutoff for a household of two becomes $55,000. After he marries Mary, he’s likely only going to be eligible for a Chapter 13 filing.

Whenever you’re making changes to your householdn size, remember that there could be consequences in terms of your bankruptcy filing status.

If you have other questions or comments, please let me know.

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