Bankruptcy and Your Spouse
6.0 Bankruptcy Trustee Statement: If you and your spouse were bankrupt, after being discharged, both of you shall get individual credit cards to rebuild your credit rating.
Each spouse is responsible for rebuilding their own credit history.
7.0 Bankruptcy Trustee Statement: If you are bankrupt and your spouse owns a home only in his/her name, it will not be included in the bankruptcy. However, if you plan to move into that house, you should first consult your trustee.
Whatever assets are in your spouse’s name only will not be included in your personal bankruptcy. It is not your house is therefore it cannot be seized by a creditor including a trustee in bankruptcy. Note that this concerns a house that was never in your name. If it was in your name then transferred to your spouse then the trustee can legally petition to seize that house since the transfer may seem to be an effort to remove that asset from your name before a declaration of bankruptcy.
8.0 Bankruptcy Trustee Statement: In a joint line of credit, if one partner files bankruptcy, both partners will be responsible and affected by the bankruptcy process.
In any joint loans, both parties are equally responsible for payments on that loan. If one partner files for bankruptcy then the bank will require the full payment immediately from the other partner. This is what is known as “calling a loan.” If the other partner cannot pay off the entire loan as is most frequent, it is possible that they would be petitioned in the bankruptcy as well.
9.0 Bankruptcy Trustee Statement: If both partners go bankrupt at one time, they are both entitled to keep their own separate equity shares in properties.
Explanation. Went two partners who own a rental property go bankrupt, after the paying of debts, whatever is left may be proportionally split depending on how much shares in the property were originally owned.
10.0 Bankruptcy Trustee Statement: Consent of partner is not required to file bankruptcy.
If two or more partners own a rental property and one has to go bankrupt, the consent of the other partner or partners is not required for one to go bankrupt. If the other partners is/are not able to finance the impending bankruptcy portion of the loan, then the bankruptcy trustee will seize the entire building, sell it, and after the payment of debts the remaining funds will be proportionally split between the remaining partners.