Getting A Bankruptcy Discharge Without Filing Bankruptcy
Yes, it’s possible. If you are married, do not ever get divorced, and have no separate property. You can get a Bankruptcy Discharge of all your dischargeable debts, if only your spouse files for Bankruptcy. This is because California is a community property state. All community debts are discharged in Bankruptcy and community assets can never be pursued.
Thus, a creditor can no longer pursue community assets, but only separate property. Since earnings and virtually all property acquired during the marriage after the spouse’s discharge are community property, (California Family Code §760), a creditor is prohibited from pursuing the same. And since F.C. §§910 generally provides that all community property is liable for debts incurred before or during marriage by either spouse, all of the community property belonging to both spouses are included in the filing spouse’s bankruptcy estate and subject to the administration of the Bankruptcy Court. See Section 541(a)(2). The creditor can only pursue the non filing spouse’s seperate property, which generally does not exist outside of divorce, death, inheritence, and other unpopular areas.
The Devil Himself Could Effectively Receive A Discharge in Bankruptcy
“the Devil himself could effectively receive a discharge in bankruptcy if he were married to Snow White.” Alan Pedlar, Community Property and the Bankruptcy Act of 1978, 11 ST. MARY’S L.J 349, 382 (1979); cf. Gonzales v. Costanza (In re Costanza), 151 B.R. 588, 590 (Bankr.D.N.M. 1993) (“I would add: if [the Devil] does not treat her better than his creditors, [Snow White] will, by divorcing him, deny his discharge.”).
“… According to Section 524(a)(3), after-acquired community property is protected by injunctions against collection efforts by those creditors who held allowable community claims at the time of filing. This is so even if the creditor claim is against only the nonbankruptcy spouse; …” In re Kimmel, 378 B.R. 630, 636 (9th Cir.BAP 2007), citing Burman v. Homan (In re Homan), 112 B.R. 356, 360 (9th Cir. BAP 1989).
The sole exception is seperate property. The non-filing spouse’s creditors are free to enforce their judgments against the non-filing spouse’s separate property (if he/she should have any). Although it is likely that the non-filing spouse will make sure that everything acquired during marriage is community property so that it is protected from creditors, in the event of divorce, any and all property acquired by the non-filing spouse in the divorce, as well as all income and assets acquired subsequent to separation, would be separate property and therefore, subject to enforcement by creditors. All property would also become the spouses’s separate property in the event of the filing spouse’s death, unless certain estate planning measures have previously been engaged.
Written by Michael G. Doan–
Owner of the Oceanside Bankruptcy Attorney office, Michael not only manages his business, but is also a highly skilled San Diego Bankruptcy Attorney with over 20 years of experience. He specializes in many fields, such as: insolvency, bankruptcy, consumer rights, debt negotiation, creditor collection abuse, estate planning, contracts, real estate, and tax. Michael is currently concentrating his practice solely in Bankruptcy Law and is a Board Certified Specialist in Consumer Bankruptcy Law by the American Board of Certification, one of only fourteen such attorneys in all of California. Mr. Doan also practices on the cutting edge of bankruptcy law, and was the first attorney in the entire Southern District of California to file the very first Chapter 7 Bankruptcy and very first Chapter 13 Bankruptcy under the new Bankruptcy Laws which went into effect on October 17, 2005.
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