Most community property states are in the South and West. That’s because the idea of community property came from Civil Law in continental Europe rather than from Common Law in England. Some of the Southern and Western states originally were Spanish or French territory. So these states have some legal heritage from those countries, including the idea of community property.
Wisconsin adopted the idea of community property recently. So it comes as a surprise to many Midwesterners who move to Wisconsin from neighboring states like Michigan, Minnesota or Illinois to find out that their marriage has different economic consequences in Wisconsin.
This can be important in bankruptcy cases. That’s because bankruptcy allows a debtor to get rid of debt. And strictly speaking, debt means claims held against a debtor by a creditor.
Who is a “creditor” in bankruptcy? A creditor is someone who holds a claim. Claim includes a community claim.
So if you are married in a community property state, you are just as liable for your spouse’s debt, incurred during marriage, as your spouse is. That comes as a surprise to many people. The good news is that in bankruptcy, community claims are claims against your bankruptcy estate, even if you are the only debtor who files a bankruptcy case. You’ll eliminate claims against you by reason of your marriage to your spouse in a bankruptcy case because claims include community claims.
For more information about community claims click here.
Lakelaw represents people in bankruptcy cases from Chicago to Milwaukee in Wisconsin and Illinois.
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