A prenuptial agreement is often associated with a marriage between someone that is rich and someone that is not so well off. It can actually be used in a different situation where one spouse enters the marriage with a significant amount of debt. If you feel like you are in this situation, follow these steps to understand how a prenuptial agreement and bankruptcy can be used to protect yourself.
Talk About Each Other's Debts
It's common for someone to have debt when getting married. It can be a school loan, car loan, or even unpaid medical bills. That's why it is important that each of you discuss what kind of existing debts you have that the other may not know about.
If you happen to find out that your significant other does have debts that are a concern to you, a prenuptial agreement or bankruptcy should be something that you look into.
Use A Prenuptial Agreement
Any debts that are owed by an individual before getting married will still be that person's responsibility for paying them off. For example, $25,000 in credit card debt that a spouse has racked up would still need to be paid for by the spouse. What confuses the situation is that you may incur new debts together after the marriage has occurred, and paying off previous debts may come from a joint account.
Prenuptial agreements are great because they can protect you from debts that a spouse still owes. If a creditor comes after them for money that they owe, any assets in your name will be protected because you have a document stating they are responsible for their own debts. This includes property, cars, and even individual bank accounts.
Eliminate Debts With Bankruptcy
If your future spouse doesn't know how they will repay their debts, it may be ideal to file for bankruptcy before you two get married. This is because a crucial step for qualifying for bankruptcy is passing a means test. If they are filing as an individual, then only their median income needs to be small enough to qualify. Once you are married, the median income of both of you will be considered when filing for bankruptcy. What was once an option before the marriage may not be possible anymore.
Consider meeting with a bankruptcy attorney that can guide you through the process before the marriage occurs. By discovering existing issues with debt before the marriage occurs, you will be able to protect yourself in the future.
For further assistance, contact a local family lawyer, such as one from Knollmeyer Law Office.Share