The following question was submitted to John Roska, an attorney/writer whose weekly newspaper column, "The Law, Q&A" runs in the Champaign News Gazette.
I’m getting married, but first want to file bankruptcy so my new spouse won’t get stuck with my debts. Someone told me my spouse won’t be liable for my debts, so I don’t need bankruptcy. Is that right? Is bankruptcy a good idea?
Your spouse marries you, not your debt. Marriage won’t make them liable for your old debts, so you don’t need a bankruptcy to protect them from your creditors.
Debtors owe debts to creditors. Through a contract sale, or other transaction, the debtor in some way promised to pay their creditor. When a debtor doesn’t pay, the creditor can seek payment from the debtor for breaking their promise.
But only someone who promised to pay can be liable. An outsider who didn’t promise directly, or who didn’t promise to back you up as co-signer or guarantor, isn’t legally liable. Your creditors should leave them alone.
Marriage doesn’t change that. Any liability spouses have to support each other applies to marital expenses and debts, incurred together as spouses after getting married. You don’t become liable for your spouse’s pre-marital debts, and they don’t become liable for yours.
It’s just like with kids. A new spouse doesn’t have to support your kids—unless, of course, they’re actually their biological parent. Step-parents, though, don’t have to support step-kids.
Mingling assets and property can complicate things. Your creditors can go after jointly-owned property. But that’s just enforcing your liability against your property. It’s not making your spouse liable for your debt
Despite some marriage vows, a new spouse does not “with all [their] worldly goods thee endow.” Getting married does not automatically make spouses joint owners of each other’s property. That might occur in a “community property” state, but Illinois isn’t one.
As a practical matter, the only property creditors will mess with is real estate or bank accounts. Occasionally, they’ll go after other stuff that’s extremely valuable—a Ferrari, or maybe a Rolex. Usually, though, only land and money are worth a creditor’s trouble.
Therefore, if you and new spouse don’t share title to land, and don’t share joint bank accounts, your creditors won’t have any jointly-owned property to aim at. Spouses don’t have to jointly title the real estate they acquire during their marriage, and separate bank accounts are perfectly legal, so it’s quite possible to keep property separate and safe from your creditors.
Unfortunately, that gets more complicated if your pre-marital debt is owed to Uncle Sam. The IRS can—and will—seize joint tax refunds to collect one spouse’s federal debt.
So, if you owe for things like back taxes, student loans, or federal benefit overpayments, then consulting with a good bankruptcy lawyer would be a good idea. They can say what you can discharge in bankruptcy. (Student loans: probably not. Back taxes: maybe. Overpayments: probably.) Then you can decide if it’d be worthwhile.
But, for “regular” debt, a pre-nuptial bankruptcy isn’t necessary to protect your new spouse from your creditors. Getting married won’t stick them with that debt.