Bankruptcy is an option for any U.S. citizen or business struggling financially. Because the U.S. Bankruptcy Code is a device meant to help entities out of major debt and get back on their feet, it’s a process that’s adaptable to many situations. Expanding a household inevitably increases financial obligations, and many bankruptcy cases involve the assets, debts, and income between spouses. If you and your spouse are considering filing for bankruptcy in Windom, MN, Behm Law Group, Ltd. can help you throughout the process with expert legal advice and assistance.
Filing for bankruptcy as a household can be the best way to handle your debts alongside your spouse’s debts. Because Minnesota is a Common Law state, how your debts, assets, and incomes are handled in a bankruptcy petition will depend on whether they are considered joint or separate under the U.S. Bankruptcy Code.
Any debts that were accumulated from financial obligations that benefited the marriage or household are considered a joint debt—for example: food, shelter, and transportation. This means these debts will be included in any single household bankruptcy case. Any debts that are owed through a jointly-undertaken contract that both spouses have signed, or for which both spouses’ credit scores were considered, are also joint debts.
When it comes to joint incomes and assets, how they are considered in a bankruptcy case is similar to debts. Incomes are considered joint if they used to cover joint expenses. Assets and property are jointly owned if both spouses’ names are listed on the title certificates, deeds, and registration cards concerning those items. They are also considered as joint if they were purchased with joint income.
When filing a joint bankruptcy petition, the majority of the household debt is considered in the case. The debts that are not considered are debts separately incurred by the spouses. This includes business debts, any loans not jointly contracted, and other debts not incurred by spouses as one entity.
The income of each spouse can be considered as separate income. This applies to outside incomes like inheritances, investments, and gifts if they are given or devised to only one spouse and not both. If any properties or assets are purchased with a separate income or have the name of only one spouse on the legal documents, these are also considered separate.
If you’re considering filing for bankruptcy in Windom, MN, or if you have questions about whether certain debts, incomes, and assets can be applied to a joint bankruptcy petition, contact Behm Law Group, Ltd. at (507) 387-7200 for more information.