Dividing Debts and Assets In Bankruptcy

Bankruptcy Attorney

The bankruptcy process is a fairly straightforward process when it comes to debt relief. Where the complication lies is often found when debts or assets are jointly owned. Filing for bankruptcy as an individual is one way to avoid some of the hassle associated with impacting other with your debt relief efforts, but there are instances in which even filing separately can affect others.

Joint Ownership

Jointly held debts are common among married people. Many people list both themselves and their spouse when taking out loans in a partnership. Mortgages, car loans and some credit cards are the more common jointly owned debts. While not inherently bad, problems often arise when one member of the party seeks bankruptcy protection. Jointly held debts can become the sole liability of the non-filing spouse in the eyes of creditors; leaving them subject to collection and garnishments.

A similar problem arises with jointly held assets in bankruptcy. Creditors attempting to foreclosure, repossess or liquidate an asset may be able to do so, even if that asset is owned by more than one person. If the mortgage loan is listed for both spouses, the property may still be legally eligible to become part of the bankruptcy estate and used to satisfy debt obligations. Assets that are shared with a spouse, family member, friend or investor could all be at risk under the filing of one individual. Further, Ohio bankruptcy exemption laws may not be able to protect the true value of the home.
Therefore, filing for Chapter 13 may be a better solution to avoid problems with jointly held debt liability or assets; as the repayment option under the Chapter 13 plan can ensure that other parties aren’t affected by the filing.

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