Bankruptcy Basics: Your current and ex-spouse and why they must be disclosed

Many of us make decisions regarding our finances with someone else. Often a spouse or a former spouse is involved in major financial decisions, in a variety of situations. Your current spouse, with whom you may own property, can certainly affect your decision to file a petition for bankruptcy protection. Likewise, an ex-spouse, to whom you may owe financial support, also is likely to chime in on legal activity involving bankruptcy. You may have heard people say, “I’m not going to tell so and so, and it is none of their business,” but the truth is it will become their business soon enough.

Yes, you must disclose your current and/or ex-spouse to your bankruptcy attorney.

We hire bankruptcy attorneys who are experienced in the law and practice of debt relief because we rely on their advice and counsel as to what works best for us in our current financial state. While it is possible that a current or ex-spouse will have no bearing on your bankruptcy case, that is a decision your attorney should make by using their knowledge and experience with the law.

Your bankruptcy lawyer needs to know about current and/or ex-spouses to the extent their income is included or somehow affects your income, for purposes of the means test necessary to determine whether you qualify for bankruptcy relief, and which chapter may be available. For example, if you pay or receive financial support as required by a divorce judgment or separation agreement, you may qualify for a Chapter 13 bankruptcy instead of Chapter 7. In the event of divorce, you might also be obligated to maintain life and/or health insurance policies, another factor in calculating potential bankruptcy outcomes.

Bankruptcy attorneys cannot help you unless you give them accurate and complete information.

If your bankruptcy attorney determines your current or former spouse is relevant to the bankruptcy, and is entitled to notice pursuant to the law, they might have to disclose the individual as a creditor to whom you owe money, or as a co-debtor also responsible for joint debts. Responsibility for debts might also be stated in the divorce judgment, and your attorney will likely need a copy of the final divorce decree.

Giving your attorney a full and complete financial picture at the first meeting at the attorney’s office is important. Based on the information you provide, your attorney can generally tell you what bankruptcy relief may be available, but only when you give them a complete and accurate financial history. This is not a time to feel shame and hide information, because if you do, things may only be more difficult moving forward.

Full disclosure of financial facts and circumstances is necessary to avoid committing a fraud on the court.

If you fail to disclose a current or former spouse to the bankruptcy court, you may have bigger problems. Of course, in reviewing and preparing your bankruptcy petition, your lawyer is likely to discover a current or former spouse the court and trustee needs to know of, however if you work to hide their existence it is possible for your petition to be filed with incomplete information, and may be considered a fraud on the court. For more information about the penalties for defrauding the bankruptcy court, please read our article, Bankruptcy Court: Go ahead and make their day.

Joseph Wrobel, Ltd. helps people get control of their finances and a fresh start at financial freedom. The firm’s website contains informative videos about financial issues as well as bankruptcy protection for families who want a fresh start. To keep in touch and read about consumer finance news and stories you can Like the firm’sFacebook page and Follow Joseph Wrobel. Ltd. onTwitter. If you need immediate legal assistance, please call Joseph Wrobel, Ltd. by calling (312) 781-0996 to talk to an attorney.