Archive for the ‘Bankruptcy and Divorce’ Category

Debt and Marriage

I sometimes get the question “If my fiance is going through bankruptcy or has a large amount of debt can this affect me?” The answer, depends on your definition of affect. Because, of course it will influence your financial situation! It’s just whether or not it will become a problem for you as an individual.

Either indirectly or directly a persons credit situation will always come into play throughout a relationship. If you’ve always dreamed of having the house with the white picket fence, or the red sports car, your significant other’s financial situation could affect multiple aspects of the transaction including: the interest rate offered, the terms of the loan and the amount of collateral required. BUT, this is only in situations where you need a second co-signer for a loan. If your credit score is impeccable, and your income is sufficient to support the amount borrowed, you will be able to get qualified for the loan regardless. So, especially for small lines of credit (credit cards, car loans), if your credit is sufficient it’s likely your significant other’s credit woes will not come into play.

Can their debts get me into trouble?

The answer to that question is for the most part, no. Assuming that all of the debts are pre-marriage and that you haven’t personally co-signed on any of the debt personally, there is very little a creditor can do to collect a debt from you personally (i.e. sue you, or garnish your wages). That is, unless you get married and choose to title your assets jointly. Some common examples of jointly titled debts would be: joint bank accounts, joint real estate deeds and automobile titles. It is very important that you speak with an experienced attorney regarding these intricate issues because they are very complex and can lead to a great amount of headache further down the road. And no, if your fiance is going through bankruptcy personally, the bankruptcy will never be on your record, even if you marry.

What happens if we divorce?

These questions ultimately evolve into hypothetical future scenarios, “What happens if they die, or if we divorce?” Well, Illinois is an Equitable Distribution state for divorce purposes. This means that property incurred during the marriage (and this means debt too) is distributed equitably, and not necessarily equally upon divorce. So, for all intensive purposes, if your partner has a large debt load before they marry, it will not be your burden upon divorce. Debts incurred during marriage are joint debts typically, and will be distributed upon divorce (or will even survive death, assuming they are co-signed by both partners).

Is there anything we can do?

A marriage is a very fragile thing, especially in the beginning. Many factors can add stress to a new marriage, and finances are definitely one of them. A bankruptcy would give your partner a fresh financial start, before starting marriage. It’s much cleaner this way. You want to give your marriage the greatest chance of success. Please contact me by filling out the form to the right to discuss your options.

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At The Law Offices of Steven J. Grace, based in Chicago, Illinois, we represent clients throughout Chicagoland, including the cities of Deerfield, Jefferson Park, Lisle, Northbrook, Oak Brook, Park Ridge, Schaumburg, St. Charles and Warrenville; and other communities in Cook County, Dupage County, Will County, Grundy County, Kendall County, Kane County, LaSalle County and Lake County.