When people get married in Tennessee, managing their financial responsibilities becomes a major part of their relationship. One person in the marriage may be in a better financial place than the other.
However, once they get married, both of their finances intermingle. This issue often arises when only one of the spouses plans to file for bankruptcy.
Once spouses are married, they are not always automatically responsible for each other’s debts. This only happens for those debts they incurred together while they were married. They would both be financially responsible for paying off those debts.
For example, if one spouse opened a credit card before the marriage, it does not automatically become the other spouse’s responsibility when they marry. However, if the couple opens a joint credit card or purchases a home together, it will be considered a joint debt.
Tennessee lawyers can provide their clients with more information on what debts can be considered separate and which will be joint debts of the marriage in connection with a divorce. They can also explain how bankruptcy can affect a spouse’s credit in Tennessee.
How Does Filing for Bankruptcy in Tennessee Impact My Spouse?
Filing for bankruptcy can affect a spouse’s credit in Tennessee. There can be sudden financial hardships in life, which can mean a business has to file for bankruptcy.
When a business owner has to file for bankruptcy, there may be consequences to consider. If one spouse files for bankruptcy without their spouse, only the filing spouse’s debts will be discharged.
If the debts are joined, the non-filing spouse will still be required to pay the debts even if the other spouse filed for bankruptcy. In other words, the impact of a bankruptcy will depend on whether or not the debt included in the proceedings was separately or jointly incurred by the spouses.
If only one spouse is responsible for the debt and that spouse files for bankruptcy, that debt will only show up on the filing spouse’s credit report and not the other spouse’s. If, however, the non-filing spouse also receives an adverse rating on their credit score because of their spouse’s bankruptcy, they should contact the credit report agencies as soon as possible. The non-filing spouse’s credit should not be impacted by the filing spouse’s bankruptcy filing if they did not share the debt.
Before filing for bankruptcy, the spouses will need to examine their assets and who is listed as the owner of each. For example, if the marital home is only owned by the non-filing spouse, it will not become part of the filing spouse’s bankruptcy estate.
This is important because bankruptcy may lead to liquidation, or the selling of assets to pay off creditors. A Tennessee attorney can explain what property can be included and what property is excluded for the purposes of bankruptcy exclusions in the state.
Can Married Couples File Bankruptcy Jointly in Tennessee?
Yes, a married couple in Tennessee can file for bankruptcy jointly. Filing a joint bankruptcy petition lets a couple consolidate their bankruptcy case into one proceeding. This can save the couple time and money because they will likely only have to pay one filing fee and complete one set of forms.
Before a married couple files for bankruptcy, they should carefully evaluate all of their other available options. A Tennessee lawyer can help a couple review other options they may have in the state.
Bankruptcy is typically seen as a last resort option. It is important to schedule a Tennessee lawyer consultation to find out more about scheduling bankruptcy in the state, whether as a business or jointly as a married couple.
What Happens if I Share Debts With My Spouse in Tennessee?
In Tennessee, if a married couple shares an account, they are both financially responsible for the related debts. Creditors can come after both spouses for those debts.
If the debt is joint, the bankruptcy can appear on both spouses’ credit reports. If a debt is shared and one spouse files for bankruptcy, the bankruptcy may appear on both spouses’ credit reports. However, as long as the spouse who filed bankruptcy remains current with their payments, it should not affect the non-filing spouse’s credit.
If spouses try to apply for a joint loan or joint credit account in the future, the bankruptcy may have an impact on their decisions. For many years, a bankruptcy will impact whether the couple can take out a joint loan with good terms.
However, even if the spouses file for bankruptcy, they can continue to work towards better credit, so long as they timely make their payments. This means, even after filing for bankruptcy, a good credit score can still be in their future.
Depending on the type of bankruptcy a couple files, it will remain on their credit report for seven to ten years. After that time period, it should be automatically removed from their credit report.
How Does Bankruptcy Affect Marital Property in Tennessee?
How bankruptcy affects marital property in Tennessee varies depending upon the value of the asset owned. For example, if a couple bought property together, but it is worth less than an available exemption, it may not be included in the bankruptcy.
Tennessee does not participate in the federal bankruptcy exemption system. This means that residents who have lived in the state for two or more years must use the state exemptions.
A portion of a home’s equity may be protected under the Tennessee homestead exemption. There are also other categories and amounts that may apply, along with certain marriage benefits, depending on how the property is owned.
How Will a Tennessee Bankruptcy Affect Applying for Future Credit?
In Tennessee, a spouse’s bankruptcy may impact any joint financing that the other spouse pursues during the marriage. It may create some financial hurdles along the way.
When applying for a home mortgage, the financial history of both of the spouses will be considered. If one spouse’s score is low because of a bankruptcy, it can mean paying more in interest or not being approved for the mortgage at all. This can be a devastating result for everyone involved.
As a general rule, the interest rate is going to be higher when applying for a loan after someone files for bankruptcy. In order to get a lower interest rate, cosigning a loan may be a helpful option to get a lower interest rate in this type of situation. It is important for the consignor to be aware that they are also financially responsible for paying back the loan if the original debtor is not able to do so.
In order to obtain a better future outlook after filing for bankruptcy, it is essential to make sure that all of the bills related to the bankruptcy are paid on time. A debtor must be vigilant and follow the plan to avoid any more financial issues.
Depending on the chapter of bankruptcy that was filed, as noted above, it can stay on the filer’s and their spouse’s credit report for seven to ten years. It is essential to keep a positive financial record through the process by making on-time payments.
A Tennessee lawyer will be able to explain in further detail the potential impact of a bankruptcy on future credit decisions.
When Do I Need To Contact a Tennessee Bankruptcy Lawyer?
If you are already facing bankruptcy, you may think you do not have the money to look for an attorney. It does not cost anything to use the lawyer-client matching services that are provided by LegalMatch to find a Tennessee bankruptcy lawyer in your area who can review your situation and examine all of the possibilities with you.
When you use LegalMatch, you will be matched with licensed and prescreened Tennessee bankruptcy attorneys near you who can help you improve your financial situation. You may be concerned about the cost of finding a lawyer, but using LegalMatch’s services is free, so get started today.
