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Financial Infidelity Can Lead to a Joint Bankruptcy Filing

Financial infidelity occurs in just about every relationship, though the degree to which it happens varies significantly.

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Sometimes, our Louisville and Indiana bankruptcy lawyers know it’s not necessarily intentional or even conscious. It often stems from two individuals who have different perspectives about money.

A 2012 survey of some 24,000 people found that almost half of all married couples admit to keeping some kind of financial secrets. In the poll, 56 percent of women admitted to lying about money, while about 40 percent of men did the same. When it came to purchases, 32 percent of women admitting to fudging the facts, while men copped to it about 17 percent of the time.

Women were more likely to conceal beauty purchases, while men were more likely to conceal purchases for entertainment.

Aside from the fact that such concealment can erode the trust of a relationship and ultimately lead to divorce – a financial struggle in and of itself – when the purchases snowball into serious debts, it becomes an issue for both individuals. Often, the purchases are made with credit cards in both names or from accounts where both parties would be liable for the debt.

The one bit of good news for those in Indiana and Kentucky is that they are both equitable distribution state, as opposed to community property. That means instead of both parties being equally responsible for debts regardless, a judge will decide who owes what. But that’s only in cases of a divorce, and even then, the innocent spouse might still technically be on the hook with creditors for the outstanding debt. If it wasn’t paid, he or she would have to take his or her ex back to court to enforce the divorce decree.

Couples who choose to stay together, though, may decide that facing it down together means they will need to file for joint bankruptcy, which will free them both of an obligation to pay those outstanding debts.

This is important because unless you seek this protection, not only will your spouse be held liable, any joint accounts you may have held will be subject to garnishment as well.

While we do believe in honesty among spouses, it’s quite possible that a disclosure of a significant financial infidelity could result in a divorce filing. As such, your best move would be to first meet with an experienced bankruptcy lawyer. You’ll want to do this soon because it’s almost always the case that such actions come bubbling to the surface sooner or later, usually at an inopportune time. It’s preferable that the news come from you, and that you have at least a generally outlined list of options. We can help you get started.

Likewise, anyone who believes his or her spouse may have secretly racked up a significant amount of debt should also meet with an experienced bankruptcy lawyer – possibly before even meeting with a divorce lawyer, if that’s your plan – as we can help you determine what kinds of financial choices you might have both as an individual and as part of a couple.

Keep in mind there are some benefits to filing a joint bankruptcy, as opposed to a single one. For starters, your overall bankruptcy costs are going to be lower than if you each individually file. Secondly, it eliminates all dischargeable debts, so both of you are off the hook. Lastly, it tends to be more efficient.

Even in cases where a couple chooses to split due to financial infidelity, a joint bankruptcy filing can often still make sense from a financial perspective.


If you need to speak to a Kentucky bankruptcy attorney or Louisville foreclosure defense firm, contact the Schwartz Bankruptcy Law Center at 866-270-4495 for a free and confidential consultation to discuss your rights.

Additional Resources:
Does your relationship suffer from financial infidelity? Feb. 2, 2013, By Scott & Bethany Palmer, FOX News
More Blog Entries:
Report: Millions Draining Retirement Accounts to Pay Debt, Jan. 28, 2013, Louisville Bankruptcy Lawyer Blog

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