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TJ, Esq.
TJ, Esq., Attorney
Category: Bankruptcy Law
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Experience:  Licensed to Practice Law
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I am married since 1992 and live in the state of Maryland.

Customer Question

I am married since 1992 and live in the state of Maryland. My wife and I own our home we purchased in 1996 with pre- martial assests (I sold 2 houses I owned prior to marrage and cash savings prior to marriage). I paid 150k in savings for the lot and the all pre and post settlement costs, and have made every payment. My wife stopped working within 90 days of settlement and gave birth to our first child and has not really worked since. The new home mortgage and title are in both names.   I own my own business-100% stock in a corporation. I do have her set-up as an employee in order to contribute to SS and I max-out on SEP account for her annually. She is starting a new business with a friend (an LLC). What if that business fails or she defauts on a loan, can she file bankruptcy separately. Am I at all jointly responsible for her credit cards etc in her name? Can creditors get at any of the equity I have accrued in the joint household?
Submitted: 5 years ago.
Category: Bankruptcy Law
Expert:  TJ, Esq. replied 5 years ago.

Hello and thank you for allowing me the opportunity to assist you.

Question: “What if that business fails or she defauts on a loan, can she file bankruptcy separately. Am I at all jointly responsible for her credit cards etc in her name? Can creditors get at any of the equity I have accrued in the joint household?”

Answer: You are not liable for your wife’s debts. That goes for any loans she takes out solely in her name, and any credit cards solely in her name as well. Therefore, if she were to default on such a loan or credit card, then her creditors cannot go after you or your assets. However, they can go after jointly held assets up to her interest in them (i.e. your half would be protected, and her half could be taken).

Real estate requires a little clarification, however. If you and your wife own your home as a “tenancy by the entireties,” then her creditors cannot touch the house. If you own it as a “joint tenancy” or “tenancy in common,” then her creditors can get to the house, but only her portion of it. In that scenario, the house could be sold, the mortgage would be paid first, and the equity would be split evenly between you and your wife … the creditors may go after her share of the equity.

This is just a guess since I haven’t seen your deed, but I suspect you own the house as a “tenancy by the entireties” since that is the preferred way for a married couple to own property. Check your deed to be certain … it should clearly state one of the 3 methods of ownership I mentioned above.

Have I satisfactorily addressed your concerns? If not, then please feel free to ask for clarification.

.

Customer: replied 5 years ago.
If a martial separation ensued, resulting in divorce as a result of my wife's debts-before creditors filed claims or liens or forced the sale of the house (the joint-asset), with MD being a Equitable Distribution state, wouldn't the house be divided equitably, ant not even or slplit, but according to what pre-martial assets that are shown to have been used to purchase the house?
Expert:  TJ, Esq. replied 5 years ago.

Hi again.

Question: “wouldn't the house be divided equitably, ant not even or slplit, but according to what pre-martial assets that are shown to have been used to purchase the house?”

Answer: Yes, the divorce judge would take into account the pre-marital money that you put into the house. To that extent, there’s a good chance you’d walk away with a larger chunk of the house than your wife in a divorce.

Have I satisfactorily addressed your concerns? If not, then please feel free to ask for clarification.

.

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