Married Debtors; Separate Bankruptcy Estates

31 May Married Debtors; Separate Bankruptcy Estates

Two spouses file one bankruptcy case. They get one trustee, one case number, one meeting of creditors, etc. But they are still two separate people with two separate bankruptcy estates.

Here’s why it’s important. If someone dies within six months after a bankruptcy is filed, the inheritance is property of the bankruptcy estate. However, that inheritance can only be used to pay that person’s debts, and not the spouse’s debts (unless both are beneficiaries).Anything left over goes to the debtor.

Make no mistake about this. Judges mistate the rule and will deny the surplus to the debtor unless your attorney knows this. There’s confusion out there. Don’t be a victim.

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L. Jed Berliner practices exclusively in consumer bankruptcy, foreclosure defense, and related consumer protection litigation such as credit card defenses and suing debt collectors. He established his Springfield, MA practice in 1988. Attorney Berliner is a regular and active contributor to the Bankruptcy Law Network, the Bankruptcy Roundtable, and the National Association of Consumer Bankruptcy Attorneys, three specialized consumer bankruptcy forums on the Internet, and is an informal mentor to regional practitioners. He is recognized by his peers as an expert in consumer bankruptcy issues. He thoroughly enjoys being rated "excellent" in his client surveys.

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