AM I RESPONSIBLE FOR MY HUSBAND’S OR WIFE’S DEBT?

In Minnesota, the general rule is that a spouse is not liable to a creditor for the debts of the other spouse (meaning they are not jointly liable for that debt).  Minn. Stat. Section 519.05(a). However, there are two exceptions to this general rule:

1. If the spouses are living together, then each spouse is liable “for necessary medical services that have been furnished to either spouse, including any claims arising under section 246.53, 256B.15, 256D.16, or 261.04”; and 
2. If the spouses are living together, then each spouse is liable for “necessary household articles and supplies furnished to and used by the family.”

These exceptions to the general rule only apply to couples who were married and living together when the debt was incurred. If you marry someone who already has an outstanding medical debt, you will not be liable for that debt.

Unless one of these exceptions applies to you, then the only spousal debts you will be responsible for are debts which you both sign for (“cosigned debt,” or “jointly and severally liable”).

IF MY HUSBAND OR WIFE FILES BANKRUPTCY, DO I HAVE TO FILE BANKRUPTCY TOO?

No. There is nothing that requires a married couple to file bankruptcy together. Each spouse can make his or her own decision about whether to file bankruptcy, and each spouse has the right to file bankruptcy without regard to whether his or her spouse files.

However, married couples often file bankruptcy together (a “joint bankruptcy”). Most commonly, this is because married couples either have joint debt or they each have debts of their own that they want to discharge. It saves time, money, and effort to file a joint bankruptcy petition.

WHAT IS JOINT DEBT?

A joint debt is a single debt that two or more people owe. The term for this is “joint and several liability,” which means that each individual owes the debt, and the creditor can seek to collect the entire debt from either of them. Each individual is liable for the debt whether that person used the account or increased the debt or not. If a debt is owed by two people, but only one files bankruptcy, the creditor can still collect from the person that did not file bankruptcy.  

Many credit card accounts have someone who is an “authorized user” on the account. An authorized user who did not sign a contract with the credit card issuer is only liable to the extent that he or she has actually charged on the account and signed his or her name on charge slips. However, it is incredibly rare in our experience that an authorized user is actually pursued by the credit card issuer.

IF I FILE BANKRUPTCY, WILL MY HUSBAND OR WIFE HAVE TO BE INVOLVED?

This is a very common question we get when one spouse is considering filing bankruptcy, but doesn’t want to involve or impact their husband or wife. As with many things involving bankruptcy, the answer is complicated and involves many different considerations:

• As for credit reports, generally each spouse’s credit report is separate from the other’s. However, to the extent that spouses are jointly liable for a debt, one spouse’s bankruptcy filing can cause a negative connotation on the non-filing spouse’s credit report.  It is hard to gauge the extent to which this notation would affect the non-filing spouse’s credit report, but it does happen.  
• One spouse’s bankruptcy does not discharge the non-filing spouse’s obligation under a joint or co-signed debt. After the bankruptcy is done, the non-filing spouse would still need to pay a joint debt until and unless that spouse filed bankruptcy or satisfied the debt.
• When one spouse files bankruptcy, the non-filing spouse’s name and Social Security number are not listed in the case filing. However, a non-filing spouse’s name may be listed if the non-filing spouse is jointly liable for a debt, as the non-filing spouse has a right to be notified of the co-obligor’s bankruptcy filing. 
• When one spouse files bankruptcy, federal law requires that, where a married couple is living together, both spouses’ income is counted in the means test, and both spouses’ income and expenses are listed in the budget. A separated spouse’s income is not counted. A non-filing spouse’s expenses and his or her own debt payment can be deducted from that person’s income.

If you are thinking about filing bankruptcy with or without your spouse, call us. We are happy to talk to you about your situation and help you understand your options and how your bankruptcy would affect your spouse.