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Should you and your spouse file for Ch. 13 bankruptcy jointly?

In Oregon, it may not be in a married couple’s best interests to file for bankruptcy jointly. If you and your spouse are struggling with debt that is primarily in your spouse’s name, it may benefit both of you for your spouse to file for Chapter 13 individually. This is because Oregon is a common law state, which means that property acquired during the marriage is considered legally owned by the spouse who obtained it. The debts and property in your name would not be affected by the bankruptcy.

If you are a co-signer on a loan or a co-debtor on a credit card, you may still be protected from having to repay the debt when your spouse files bankruptcy individually. According to the Oregon State Bar, Chapter 13 bankruptcy includes an automatic stay for the co-debtor as well as the debtor. This prevents creditor actions against the shared property or debt. Your portion of the debt would be included in the payments your spouse will make to the trustee during the repayment plan. However, it could show up on your credit report and affect your score.

In some cases, it may be more advantageous for you and your spouse to file jointly. This is because jointly held properties may increase the amount allowable on exemptions, which are properties that can be protected from creditors in the bankruptcy. Spouses considering their options before filing Chapter 13 bankruptcy should know that this information is for educational purposes only and should not be considered legal advice.

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