What is going to be the effect of a bankruptcy filed by a spouse if they have a joint income tax return? 11 Answers as of March 12, 2014

My spouse may have a need to file bankruptcy over a medical debt. Our home and car are in my name only. He is on social security disability and is a cancer patient. We would like to file a joint income tax return but fear that it may be taken to fulfill his debt.

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Bird & VanDyke, Inc.
Bird & VanDyke, Inc. | David VanDyke
The court will take any property that you cannot exempt. Most people who file are able to exempt their assets.
Answer Applies to: California
Replied: 3/12/2014
Rhymer Law Firm
Rhymer Law Firm | William Rhymer
Although I do not handle tax filings for clients, unless your spouse owes back child support, student loans or back taxes, it should not make a difference. If he owes any of these then you should file married filing separate as the refund should be yours. If you get too much refund if you file together, you may have to prove the refund was a result of the taxes you individually paid. (Too much is defined by the allowable exemptions he has.)
Answer Applies to: Georgia
Replied: 3/12/2014
Meister & McCracken Law Firm, PLLC | Joanne M. McCracken
As a general rule, Social Security income cannot be seized by any creditor except governmental agencies. Filing for bankruptcy would protect your husband from any liability for medical debt accrued prior to the date of filing. YOu should consult a bankruptcy attorney for assistance with your specific issues.
Answer Applies to: Arkansas
Replied: 3/12/2014
GARCIA & GONZALES, P.C.
GARCIA & GONZALES, P.C. | Richard N. Gonzales
What ever portion of the income tax refund attributable to your husband's income can be used to pay his creditors if you file before he receives the income tax refund. If NONE of his income is taxable (or he had no taxable income), you have nothing to worry about.
Answer Applies to: Colorado
Replied: 3/12/2014
Law Offices of Eric W. I. Anglin
Law Offices of Eric W. I. Anglin | Eric W. I. Anglin
It will depend on your jurisdiction as there are three different opinions that deal with this issue: 1. Non-filing spouse receives 1/2 of the refund.2. Non-filing spouse receives % of the refund that is attributed to % of Adjusted Gross Income.3. Non-filing spouse receives none of it as it is a shared asset and subject to the exemptions of your state.
Answer Applies to: Indiana
Replied: 3/12/2014
    A Fresh Start
    A Fresh Start | Dorothy G Bunce
    Bankruptcy exemptions typically do not protect a tax refund check and it is quite common for a bankruptcy trustee to require that the refund be turned over to repay a portion of the debt. However, you may have more problems than just losing this one time tax refund. Medical debts can be collected against either a husband or a wife, and if your husband filed bankruptcy to eliminate his responsibility for those debts, you appear to have overlooked the fact that as a wife, you are also responsible for paying this debt. Remember your wedding vows said you took each other "in sickness & in health" and most states have interpreted this promise to mean you both have to pay each others medical debts.
    Answer Applies to: Nevada
    Replied: 3/12/2014
    Janet A. Lawson Bankruptcy Attorney
    Janet A. Lawson Bankruptcy Attorney | Janet Lawson
    Most likely that will not happen. It depends on your exemptions and the equity in anything else you own. This is a community property state, so what each of you own is owned by both of you (depending on how long you have been married). See a lawyer about your exemptions.
    Answer Applies to: California
    Replied: 3/12/2014
    Mauritz Van Niekerk, Attorneys at Law
    Mauritz Van Niekerk, Attorneys at Law | Christiaan van Niekerk
    Your income will be calculated but your assets will not be affected.
    Answer Applies to: New York
    Replied: 3/11/2014
    Tokarska Law Center
    Tokarska Law Center | Kathryn U. Tokarska
    Your spouse potentially has community interest in the assets you mentioned (car & house) regardless of the fact that you hold title and those assets UNLESS they can be exempted can be taken by the Trustee in bankruptcy. Consult a bankruptcy attorney before doing anything and discuss with that person your income tax concerns.
    Answer Applies to: California
    Replied: 3/11/2014
    Deborah F Bowinski, Attorney & Counselor at Law | Debby Bowinski
    In Colorado, at least, the trustee will not usually take a tax refund it the only earner in the household is a non-filing spouse. However, even if your husband files an individual case your income will be counted in determining whether he is eligible to file a chapter 7 case. He should consult with a lawyer to make sure that bankruptcy really is the right option for him.
    Answer Applies to: Colorado
    Replied: 3/11/2014
    Idaho Bankruptcy Law | Paul Ross
    This is something that will vary by state. Idaho is a community property state and that tax refund is usually community property. The Trustees demand the full refund be turned over (with your exempt or non-estate portion returned to you). In Idaho, it is not likely the best plan to file by yourself as you could be on the hook for the medical debts as much as your spouse. Even if he files, they could still sue you and get a judgment lien on your home.
    Answer Applies to: Idaho
    Replied: 3/10/2014
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