Bankruptcy Law Questions? Ask a Bankruptcy Lawyer Now.
In community property states, spouses equally own all property earned or received during the marriage, splitting 50-50. In bankruptcy, then, all the community property you and your spouse own jointly is part of the bankruptcy estate, regardless whether you join in the filing. Your separate property -- property you owned before the marriage -- is not effected by your spouse's bankruptcy. Property held by your spouse will be used to settle debt first, and then non-exempt community property will be used.
Thus, in this particular instance, if the money that you used was jointly your money, the trustee could reverse the transactions and take that money to pay off your creditors on a pro rata basis.
It is not certain that the trustee will do this, but it is possible.
The money was used to pay IRS and Mortgage, our only two secured creditors. All other creditors are unsecured. Wouldn't they get priority in payment of any funds available. If that is the case, then we will file. If the Trustee can take the money away from either the mortage or IRS we will lose our home, it was about to go into forclosure.
I can't believe that the trustee could take money back from the IRS or Mortgage to pay unsecured creditors.