Business Debt and Your Spouse
As a business owner, determining whether your spouse is liable for what
is owed in a bankruptcy filing depends on how your business is structured
and the debt incurred. In many situations, for married couples it depends
on where you live. In other words, an aspect you may need to consider
is how common law and community property states handle such situations.
A few factors can help determine understanding who is liable for business
debt. One being the structure of your business. If the business is a sole
proprietorship or one individual, that person would likely be responsible
for outstanding debt. But, if the business was considered a joint venture
or a partnership, both spouses could be responsible for what is owed.
If you are a co-signer for your spouse’s debt, you could also be held
liable no matter how the business is structured.
In common law states, if you co-signed a debt for your spouse you may be
liable. Common law states often consider one person liable for debt. Meaning,
the person who applied or signed loan documents would be responsible.
Community property states most often require spouses to share everything
between them including income and debt acquired during the course of the
marriage. Income and property is owed equally between each spouse. In
this case, both spouses could be responsible for business debt incurred
by one spouse or the spouse that owns the business.
Discuss your situation with an experienced bankruptcy attorney in Dallas-Fort
Worth to learn more about the filing process and if it is the best solution.