Family credit card debt

Credit Cards in Family or When it's Best to File Bankruptcy

When a couple decides to marry, there inevitably arises a question "Should I have a joint with my spouse credit card account or would it be wiser to preserve the current credit line or apply for new credit card in my name only?" And while your happiness seems to be eternal at the moment, leaving this question without a solution may have a painful effect on your conjugal life later on.

Not infrequently improper credit card management of one of the spouses or both brings about a bankruptcy threatening situation and when there is nothing left but to file, you face a number of perplexing questions.

The most frequently asked question of late is whether a spouse can file for bankruptcy alone - without the other - and what effect it will have on his credit report and credit score. This question is more interesting than difficult and the answer is different in every particular situation.

To be more exact, there may be several solutions for each single case and the most important thing is to determine which is of more advantage to you.

Most confusion turns up in case you have a joint with your spouse bank account and you have made an unmanageable credit card debt. For some reason you want to file alone or your spouse refuses to join you in the petition, but do not make haste - the favorable outcome of this idea depends on a number of factors to consider.

If at the moment you are weighing the pros and cons of filing together or alone you should arrange a consultation with a lawyer who will give you professional advice based on his knowledge of the local bankruptcy jurisdiction, the status of your marriage, the nature of your debts, your income source and a number of other things.

Anyway, the lawyer's general answer will be "Yes", with some specifications, though.

Imagine you have a joint with your spouse credit card account with some of the MasterCard credit products. You made the application for the card together, so both your names are on the account.

Now, if one of you files for bankruptcy, it doesn't mean that the debt made in the name of your spouse is also eliminated. No, your husband or wife is still responsible for their part of charges, and as there is often sort of confusion as to which bill is whose, the whole process drags on. That's why it is sometimes important to have separate credit card accounts so as to avoid filing if you don't want to.

Then, if you plan to file individually, ask yourself whether it is really to your advantage at the moment. You may use bankruptcy as a delaying factor if you are facing, let's say, a mortgage foreclosure. But if the judge gets at the roots of things and exposes your trick, you will make "bad faith" and will be lose the right to refile another bankruptcy when you really need it.

But good thing about this is exactly that your spouse didn't file! Thus when you are not allowed to refile bankruptcy to save more time, your husband or wife can do it. Then, your family has another month grace period to find money for the necessary mortgage payment and save your home.

So, you see that there are a number of nuances about filing individually. You are strongly recommended to consult your lawyer before venturing upon this.

Bryant Park

Bryant Park is a financial consultant for one of the companies listed on Wall Street. He writes on a variety of topics ranging from credit cards to different loans that can be availed by consumers. He holds a bachelor degree in Financial Services from Dartmouth College.