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Can My Husband's Business Debts Affect My Home Ownership?

Can My Husband's Business Debts Affect My Home Ownership?

Full question:

My home is in my name only and debt free, my husband's partner is considering bankruptcy or foreclosure, will my home be safe?

Category: Debts and Credit
Date: 04/07/2025
State: Georgia

Answer:

It is possible for a spouse's property to be attached if the property is used as security for a loan, held jointly, or they live in a community property state, which Georgia is not. If you did not use separate property to secure the debt, nor cosigned or guaranteed the debt, and the debt is the sole debt of one spouse, separate assets may not be used to pay the sole debt. However, property held jointly may be sold to recover the debtor spouse's equity to pay the debt.

Generally, a spouse is not liable for the debts of the other as long as it is an individual account, the spouse running up the debt is not an authorized user, surety, guarantor, or cosignor, and the couple does not live in a community property state. However, even in a community property state the assets of the spouse not running up the debt could be at risk. For example, in cases involving, among others, bankruptcy, divorce, or other litigation, creditors may go after assets held jointly by the debtor and non-debtor spouse such as a bank account in both their name.

This content is for informational purposes only and is not legal advice. Legal statutes mentioned reflect the law at the time the content was written and may no longer be current. Always verify the latest version of the law before relying on it.

FAQs

What disqualifies you from filing bankruptcies?

Several factors can disqualify you from filing for bankruptcy. If you have filed for bankruptcy in the past eight years, you may be ineligible for Chapter 7 bankruptcy. Additionally, if your income exceeds the state median income for your household size, you might not qualify for Chapter 7 and may need to file for Chapter 13 instead. Also, if you have committed fraud or failed to complete credit counseling, this could disqualify you. It's essential to consult with a bankruptcy attorney to understand your specific situation.

What assets can you lose in Chapter 7?

In Chapter 7 bankruptcy, non-exempt assets can be sold to pay creditors. This may include luxury items, second homes, or additional vehicles. However, many essential assets may be exempt, such as your primary home, necessary clothing, and basic household goods. Each state has its own exemptions, so it's crucial to review Georgia's specific laws on exempt property to determine what you can keep.

What cannot be wiped out by bankruptcies?

Certain debts cannot be discharged in bankruptcy. These include student loans, child support, alimony, certain taxes, and debts incurred through fraud. Additionally, if you have secured debts, like a mortgage, you may still be responsible for those obligations even after bankruptcy. It's important to understand which debts remain to plan your financial future effectively.

What makes you eligible to file bankruptcies?

Eligibility to file for bankruptcy typically depends on your income level, the type of debt you have, and whether you have completed credit counseling. For Chapter 7, your income must be below the state median for your household size. For Chapter 13, you must have a regular income to propose a repayment plan. Additionally, you cannot have filed for bankruptcy in the last eight years if seeking Chapter 7. Consulting with a bankruptcy attorney can clarify your eligibility.

Can they come after me for my spouse's debt?

Generally, creditors cannot pursue one spouse for the other's individual debts if the debt is solely in that spouse's name. However, if you live in a community property state, this could differ. In Georgia, which is not a community property state, your separate assets, like a debt-free home in your name, should remain protected from your spouse's debts, provided you haven't co-signed or guaranteed those debts.