Debt can cause serious concerns for romantic couples. One question that can create anxiety in one partner is whether getting married will make him or her liable for his or her partner’s debts. Given that it’s not uncommon for many couples to have unequal debts, assets, and incomes, it’s a topic that comes up frequently. No one wants to talk to a New York bankruptcy lawyer shortly after getting married.
Fortunately, getting married (in New York at least) does not cause one partner to become liable for the debts of the other. To a great degree this is because New York, unlike states such as California or Texas, is not a community property state. In those states, when people get married, their incomes become part of their community property rather than their own, and so debts that one spouse brings to the marriage can be paid for out of the community property, which creditors can try to seize.
New York doesn’t work like that (for better or worse). In New York, a spouse’s income remains his or her own property provided it goes into an account under that spouse’s name. Consequently, a spouse that does not wish his or her assets to become liable for his or her partner’s debts need only keep a separate account. Creditors can, of course, try to seize assets held jointly, which can range from joint accounts to real estate in both spouses’ names.
There is an exception to the general rule: If a debt is used for the benefit of the marriage and it’s for necessary items like food, shelter, clothing, or child care, then the spouse whose name is not on the account can be held liable.
Understandably, there can be edge cases for married couples when it comes to what’s necessary and who’s benefiting. But for people who are approaching marriage, the distinction is going to be clearer cut. As a result, significant debts of one premarital partner are not going to be a problem for the other.
The ability of one spouse to avoid liability for the debts of the other is a significant reason why bankruptcy by one spouse alone is possible. So long as spouses keep their incomes separate, a trustee cannot bring a non-filing spouse’s assets into the bankruptcy. Click here to read more about married couples in bankruptcy.
If you are approaching marriage, then you don’t need to worry about your future spouse’s creditors going after your income, and so long as you’re careful with your assets, they won’t be able to. However if you are the one with the debts, then it can be advantageous to file before getting married so that your partner’s income isn’t taken into account, whether you are living together or not. Your partner would only play an indirect role by reducing your expenses in schedule J. Talking to an experienced New York bankruptcy attorney can help you strategize your options, whether your spouse’s names are on the debts or not.
For answers to more questions about marriage and bankruptcy, the automatic stay, effective strategies for dealing with foreclosure, and protecting your assets in bankruptcy please feel free to contact experienced Brooklyn bankruptcy attorney Bruce Weiner for a free initial consultation.