Jun 08 2011
Bankruptcy and Community Property
There is always an amount of confusion when it comes to the property of married couples when there is a bankruptcy filing. Where income is concerned, the couple’s income is shared in a community property state. Income earned by either spouse during the marriage is considered community property. The same holds true for property that was purchased or acquired during the marriage. Upon meeting with the bankruptcy attorney, all this information must be available in order to file properly.
Property owned before the marriage, gifts, inheritances, etc. by one spouse is considered separate property of that spouse alone. Income, property, or gifts acquired after permanent separation or divorce is also separate. Laws in community property states are unique to each state and your bankruptcy lawyer will advise of your best course of action.
It should be noted that in community property states, creditors of one spouse can go after the assets and income of the married couple to make good on joint debts. In a community property state, most debts incurred during marriage are considered joint debts regardless of how the debt is incurred.
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