Navigating Bankruptcy with Shared Assets in Non-Married Relationships
As societal norms shift, an increasing number of couples are cohabiting and sharing assets without formalizing their union through marriage. While this can offer more flexibility and autonomy, it can also create complex financial dynamics, particularly if bankruptcy becomes a consideration for one or both parties. In this article, we will dissect the nuances of handling shared assets in non-married relationships during bankruptcy proceedings.
What Constitutes ‘Shared Assets’?
Shared assets can range from joint bank accounts and jointly owned property, such as homes or vehicles, to shared liabilities like co-signed loans. These assets are intertwined with the financial identities of both individuals, regardless of their marital status.
Challenges in Bankruptcy Proceedings
As you might assume, this particular situation presents unique challenges to the debtors who are filing for bankruptcy. Let’s go over what these challenges might look like:
1. Distinguishing Separate vs. Shared Assets
Unlike married couples where assets might be classified based on community property or common law systems, non-married couples don’t have this standardized distinction. This can complicate determining which assets are truly shared and which belong to the individual filing for bankruptcy.
2. Shared Debts
If one partner has co-signed a loan or shares a credit card, they can find themselves fully responsible for the debt if the other party files for bankruptcy. This means that an individual who may not have expected to be included in the bankruptcy will be.
3. Equity in Jointly Owned Property
If a jointly owned property, like a home, has equity, it may need to be sold to satisfy creditor demands. This can be a contentious issue, especially if one partner doesn’t want to sell, or if one partner lives in the home, but doesn’t co-own the property.
Legal Considerations and Protection Measures
Nothing could be more useful to an individual, or an unmarried couple, than a qualified bankruptcy attorney who can parse through the complexities of bankruptcy law. While there are some preventative measures, such as considering entirely separate finances, as cohabitation becomes more common this becomes less of a reasonable solution.
Therefore, an experienced bankruptcy lawyer at your side can be the tool you need to avoid undue financial hardship.
Putting it All Together
The landscape of relationships and financial entanglements is evolving. As more couples choose non-traditional paths, understanding the implications of shared assets during bankruptcy is crucial. Through careful planning and sound legal advice, couples can navigate these complexities and protect their financial futures.