When you are in a financial pit, it may seem nearly impossible to get yourself out. That is when declaring bankruptcy might start to cross your mind. Declaring bankruptcy could clear away several kinds of debt that you may currently owe and give you a fresh clean slate. Declaring bankruptcy may seem like a pretty nice solution to a gigantic problem, does it not? However, not only does this create negative repercussions for you but declaring bankruptcy could also do financial harm to your spouse/co-signer.
What Are Options To Declaring Bankruptcy?
A person may become overwhelmed with the amount of debt they have and may think that bankruptcy is the only solution. However, there may be a way to handle debt without having to declare bankruptcy:
- Negotiating with Lenders– If a person is currently going through financial struggles, lenders are sometimes willing to lower the amount due each month. This option is definitely worth looking into.
- Seeking Credit/Debt Counselling– There are trained professionals/companies that help people come up with a plan to eliminate debt, and financially guide them
- Debt Consolidation– Debt consolidation involves transferring various debts into one form. This way, all debt has the same interest rate / (usually a much lower one) and the same payment schedule. Some people find that this makes debt much more manageable.
- Setting up new Repayment Plan With Lenders– Some lenders may extend the length of repayment on a loan or a line of credit. This can make monthly payments more manageable.
Does Declaring Bankruptcy Affect Your Co-signers/Spouse?
Unfortunately, yes it does. When you declare bankruptcy, depending on your situation, you are not the only person who will be affected as a result. There are all kinds of ways in which someone who co-signed on a loan with you, or even your spouse, may be negatively affected by your decision to sweep all of your debts out of the door by deciding to do this.
It is important that you have a complete understanding of these effects before you declare bankruptcy so that you do not unintentionally harm someone you care about in a severe financial way.
How Bankruptcy Affects Your Spouse
If you are married and filing for bankruptcy, your spouse does not have to file with you. You may file completely alone. However, despite the fact that you have filed alone, that does not mean that your spouse will not be affected by your actions.
There are still consequences that should be taken into consideration by the both of you before filing for bankruptcy. Make sure that you are making the best financial decision for both yourself and your spouse.
Whether or not your spouse will be affected by your declaration of bankruptcy will depend largely on a few different factors, including:
- Whether or not you currently have any debts or joint property with your spouse
- The property laws of the state you reside in
- Whether you file for a Chapter 7 or a Chapter 13 bankruptcy
How it Affects Your Co-signer
That being said, a spouse is not the only person who may be affected by your declaration of bankruptcy. If someone co-signed a loan or any kind of credit with you, they could face some negative repercussions as well. A co-signer is there to make sure that the debt you have taken out gets repaid if you are unable to do so.
If you declare bankruptcy while having had someone co-sign for you, creditors will come after them. Although collection activities against you will have come to a halt, they will now be harassing your co-signer. That said, there are steps you may take in order to protect your co-signer.
If you filed for a Chapter 7 bankruptcy, there are a couple of different things you can do that will keep a creditor from harassing your co-signer, such as:
- Paying Off the Debt: Even though you have declared bankruptcy, you may continue to pay off your debt until it is completely paid off. You could also pay in one lump sum, but of course this would be unusual considering most people declare bankruptcy because they do not have the money to pay their debts.
- Reaffirming the Debt: Before you decide to file a Chapter 7 bankruptcy and receive the discharge for it, you could reaffirm secured debts like mortgages, car loans, and other credit accounts. By reaffirming a debt, you are giving up the benefit of your discharge and making yourself personally liable for that obligation once more. That being said, unless you need the particular item it is not advised that you do this.
With a Chapter 13 bankruptcy, there is more protection offered to your co-signers. Additionally, you will have more time to repay the co-signed debt through your three to five year Chapter 13 repayment plan.
The automatic stay you acquire from a Chapter 13 bankruptcy will protect your co-signer from any creditors being able to collect on consumer (or rather non-business) debts. However, this could be lifted in the case(s) of:
- The co-signer got the consideration (aka benefit of the deal) for the claim of the creditor
- You are not planning and offering to fully repay the debt through your Chapter 13 plan
- The creditor will end up losing money somehow if the stay remains in place
Can A Married Couple File For Bankruptcy Together?
If both people in a marriage are overwhelmed by debt and are considering filing for bankruptcy, they have the option to file jointly. Sometimes couples pursue bankruptcy together to take away the stress that debt carries, to protect assets, and to stop wage garnishing. When filing jointly, couples can save on fees and paperwork.
Does My Spouse Have to Know That I am Filing For Bankruptcy?
Technically a person’s spouse does not need to know if the other person is filing for bankruptcy. This is possible because credit and debt can function separately even after marriage. However, like most issues in a marriage, it may help to be transparent.
What Debts Cannot Be Eliminated From Bankruptcy?
Each state in the United States is different but generally, there are a few kinds of debt that declaring bankruptcy cannot eliminate:
- Child Support
- Debts from Injury
- Debts from Inflicting Injury
- Specific Student Loans
- Secured Loans – the lender will just collect the asset involved.
How to File For Bankruptcy?
- Choosing to Hire a Bankruptcy Attorney – If they can, many people will choose to hire bankruptcy attorneys. Bankruptcy attorneys file the paperwork and perform other heavy lifting for you. Filing bankruptcy can be done without hiring a layer, but having an attorney makes the process smoother.
- Figure out Eligibility-When determining bankruptcy eligibility, income, financial records, and expenses will all be looked at.
- Finding the Paper Work- Each state works a little differently but all the paper work needed can be found online.
- Complete the Paperwork- Once the proper bankruptcy forms are collected they need to be filled out as accurately as possible and taken to court.
- Counsel With Bankruptcy Trustee – Once the paper work goes through, the court will assign the individual a bankruptcy trustee. The trustee works on behalf of the creditors and helps determine how many assets they can keep.
- Go to Credit Counselling- The individual filing for bankruptcy must be educated about finances through mandatory credit counseling.
- Meeting With Creditor – This is also known as the 341 meeting. In the meeting, the individual declaring bankruptcy will speak to their different lenders and explain the financial situation.
If a legally married individual is looking to declare bankruptcy, they may be curious if they can do it independently of their spouse and how it may impact their spouse. A legally married person can file for bankruptcy on their own, and as long as assets and debts are separate between spouses, filing should not impact their spouse. Before looking into bankruptcy, it may be a good idea to consider other forms of debt management. If a person is still looking into filing for bankruptcy, there are a few steps they need to take.
How Do Bank Transfers Work?
Before diving into how a bank transfers work to help someone, it would be best to know what they are. Bank transfers, also known as wire transfers, are a type of money transfer option that allows one to get their funding out of their account, and to whatever other bank account destination they decide to put it in.
In short: When people talk about bank transfers, they are talking about the movement of some funding into or out of their own bank account! Many financial institutions offer bank transfers as an option because of the fees that could be charged when using their network services to make it possible.
But where can it go? Good question! Here are a few bank transfers that could be possible (depending on the bank):
Bank transfers with the same bank: You may use a bank transfer to move money from one of your bank accounts to one of your other accounts within the same bank. For instance, one could do a money transfer from their main checking account into their savings account, or vice versa! Not to mention that most bank transfers within the same institution are typically free.
Bank transfers to another bank account or financial institution: Most institutions will allow someone to use their bank account to transfer money into another bank. Usually, these types of transfers may incur a fee, but are usually just as fast as transferring to the same bank.
Many of these common bank transfers are vital to those looking to give money to family, or even move money internationally. The best part is that many banks and institutions have been able to nearly perfect bank transfers into a more technologically friendly environment. Here are three ways that bank transfers could work:
Online: Many institutions now give their customers an online bank account and mobile app to work with, so they could do bank transfers on the go! By following the instructions on-screen and entering the correct information and details, bank transfers save paper and time for those nowhere near their available branch!
Over the phone: Calling could be just as convenient, and many customer service and phone lines are dedicated to making bank transfers simple and easy! Most of the time, a bank’s customer service representative will guide the customer through most of the process while in other cases an automated robot voice will be happy to help!
In-branch bank transfers: Say if someone happens to have the money in-hand and decides not to work through the hassle of getting it into their bank account and make a money transfer to another person’s bank account. Then that person does not have to fret, since many banks also do in-branch bank transfers that let’s someone come in and get that money to its rightful recipient’s bank account!
For the most part, wire transfers are a convenient way to give money out to another account or provide someone else funding that they need. But what are the pros of having money transfer options available in one’s own bank?
The Changing World Of Bank Transfers
To review, bank wire transfers are a quick, efficient way to move money from one bank account to another through existing banking networks, as well as providing a safe way of providing funding internationally.
And like most technology these days, bank transfers have become a much more hassle-free way to move money, especially since most banks allow someone to initiate these wire transfers online and by the phone as well. But one thing that seems to slow down bank transfers nowadays are the fees.
Most of these fees for bank transfers are typically between $25 to $85 or more. This means that making a money transfer out of the country is probably a much more expensive process compared to moving money to another bank account from the same country.
Luckily, the future has also made wire transfers a much more widely common action because of two words: PayPal. Since its inception, PayPal has dominated as a service that lets people make a free account and make wire transfers to almost anyone who has their bank account connected to the site.
Many gift and wire transfers are services that have smaller fees that most people could manage while also providing online email receipts and a process that is just as quick as most common bank transfers. Because of this, there are dozens of similar online companies that make these networks of wire transfers possible from all over the world!
Depending on your preference, wire transfers have been made a common way to give others money from the other side of the country through a bank account!