Debts and Assets In Bankruptcy
When it comes to debt relief, not all solutions are created equal. Some debt relief options, may not be effective for debt resolution or could put you at risk of further debt collection. While the bankruptcy process can be a tricky process when it comes to debt relief, much of the complications are the result of jointly owned debts and assets.
Jointly held debts are debts in which more than one person is listed on the account as the financially responsible party. These are common among couples and some dependents. Some of the most common joint owned debts are mortgages, car loans and some lines of credit. While jointly owned debts are not inherently bad, problems can arise when one member of the party seeks bankruptcy protection. If one member of a couple files for divorce, jointly held debts can become the sole liability of the non-filing member in the eyes of creditors. When this happens, the transfer of liability can land exclusively on the non-filing partner, leaving them subject to collection and garnishments. Therefore, it is highly recommended for anyone considering filing for bankruptcy that is a member of a legal partnership, consult with a Sacramento bankruptcy lawyer for proper guidance.
Similarly, problems can arise in a bankruptcy filing when there are jointly held assets by a couple. Creditors can still proceed with actions such as a foreclosure, a repossession, or when liquidating assets. If a mortgage loan is listed in the name of both parties, 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, California bankruptcy exemption laws might 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.