Does My Spouse Have to File Bankruptcy With Me?

I had some new clients today who wanted to save their home from foreclosure. They had been getting a run-around from their mortgage company, Chase, about a possible loan modification. After about 6 months of attempting a modification, they were now $7,100 behind on their mortgage.

I talked with them about filing a Chapter 13 bankruptcy to automatically stop any further foreclosure efforts by the mortgage company. As the husband and wife sat in my office, I could tell that the wife wanted to file immediately, but that the husband sat silently. So, I asked him if he had any other debts in his name other than the mortgage. He said no. So, I said that the answer was simple. The co-debtor stay of the Chapter 13 would protect both wife and husband. In other words, the wife could file a Chapter 13 case in her name alone, and the husband’s property interest in the home would be protected as well. For example, the mortgage company couldn’t come back later and collect additional money from him.

He said me that he was worried about needing to get a new car during the 3 year Chapter 13 plan. Both of their cars had over 120,000 miles on them, so he knew that they were getting close to the point where they would need a new car. And I told him that although you can get a car loan while in Chapter 13, it does take some extra work.

The result: the wife just signed her Chapter 13 petition in her name alone and they are automatically stopping the foreclosure. She will repay the mortgage arrears in a 3-year plan. This is their only debt, as they don’t have any credit card or other unsecured debt.

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