Your spouse may think they are helping you by filing for bankruptcy individually rather than jointly. However, this may still affect your joint assets, individual credit score, and more. So before they follow through with their bankruptcy declaration, you may make one last-ditch effort to protect yourself by suggesting a postnuptial agreement. With this in mind, please read on to discover whether a postnuptial agreement will offer effective financial protection from your spouse’s bankruptcy filing and how a seasoned Morristown prenuptial agreement lawyer at Graves Andrews, LLC can help confirm this is the right move.
Can a postnuptial agreement protect me from my spouse’s bankruptcy filing?
One of the functions your postnuptial agreement can perform is to outline your and your spouse’s separate assets. That is, these are the assets you acquired before your marriage (i.e., a luxury item) or inherited outside of your marriage (i.e., an inheritance from a loved one). And with that, these assets are to be protected if your spouse files for Chapter 7 bankruptcy.
This is because, at this time, your spouse’s appointed bankruptcy trustee may take management and ownership over some or most of your marital assets. They may then decide to sell these assets to gain liquid funds. Ultimately, they may distribute these funds amongst your spouse’s outstanding creditors. So, with your separate assets disclosed in an established postnuptial agreement, a trustee cannot accidentally include them in the bankruptcy case.
What should I consider before establishing a postnuptial agreement?
The timing for when you establish your postnuptial agreement to when your spouse declares bankruptcy may be crucial. This may be especially true if, for example, you changed the title of your separate asset to include your spouse’s name during your marriage (i.e., your family home). Or, if your spouse primarily managed your separate asset during your marriage (i.e., taking out loans to renovate your family home).
So, say there is a last-minute title transfer to include your name alone. You may also disclose this as your separate asset in your postnuptial agreement. Well, the New Jersey bankruptcy court may grow suspicious that your spouse is attempting to hide bankruptcy assets and subsequently defraud their creditors. In turn, they may threaten to or ultimately dismiss your spouse’s bankruptcy case.
There is also the other element of bringing up the concept of a postnuptial agreement with your spouse may be awkward and tense. You must communicate that your intention is not to separate or divorce from them soon. Rather, you may express that you are simply concerned about their financial management, even if a majority of their debt will likely be discharged after their bankruptcy case. In the end, you must deliver the message that you simply want to establish this document as legal backing for your separate assets, with which you may continue to enjoy together in your marriage.
Before you take any further initiative with your divorce, we urge you to consult a competent Morristown family law attorney. Most definitely, the team at Graves Andrews, LLC is eager to work with you.
