23 Nov My dad declared bankruptcy. What happens to mom’s credit?

Q. My father declared bankruptcy without telling my mother. How will this affect her credit?
— Concerned

A. It seems that was something of a surprise for your mom.

When one person files for bankruptcy, in New Jersey it does not generally have an impact on the spouse.

Generally, in a Chapter 7 bankruptcy, your dad’s debts would be discharged, so if he is the only one filing, your mother should not feel any impact, said Karra Kingston, a bankruptcy attorney in Union City.

She said the only time it could impact your mother is if they have joint debts or joint credit cards.

“If he files for bankruptcy on his joint credit cards, your mother will still remain liable for the debt,” Kingston said. “In New Jersey, a person is responsible to pay the debt that they contracted to pay back with the creditor.”

For example, she said, if one spouse takes out a credit card and incurs the debt, only he would be liable. However, if your mom and dad signed that agreement jointly, then your mom will be liable, too, she said.

“In general, if your mom doesn’t have debt, then your dad would be okay to file by himself to preserve your mother’s credit,” she said. “Generally, for both Chapter 7 and Chapter 13, to file the bankruptcy court’s look at a household’s income, debts and assets to determine if the spouse qualifies.”

In Chapter 13 bankruptcy, the spouse that is not filing is protected as long as the filing spouse pays the plan 100%, Kingston said. If one spouse files a Chapter 13, and pays all of their debts through the plan, the creditor won’t be able to sue the spouse that doesn’t file, she said.

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This story was originally published on Nov. 23, 2021.

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