Expert: Mark J. Markus- California Bankruptcy Attorney - 12/19/2011

Question
After being denied a debt consolidation loan, I talked to a financial adviser at my credit union here in Florida who determined that I may want to look into a Chapter 7. The reason being is that my bills have gotten to be more than my income, specifically the credit cards. I suffered an unemployment setback where I maxed out four cards, with unpaid balances currently totaling roughly 10k. I've never missed a payment, but I keep having my limits cut and my APR increased because of my 'debt to income ratio' after reviews. I did finally get a job but have not been able to secure a raise or a promotion since then, which has been the last three years. I have no assets at this time, I've sold everything off in an attempt to get rid of the credit cards.

I have a few questions about the consequences of this. I'm not interested in writing off all of my debt, just the credit cards. I have a student loan almost paid off and a signature loan both at incredibly low interest that I intend to keep. Are those accounts going to be negatively impacted? Or would I be forced to write off every debt?

I am also getting married next year. My future husband has immaculate credit, and is building both personal and professional assets. While I have been trying to find a way to pay off my debt before the wedding I realize at this point it's not feasible. We're worried that my black dot will also negatively impact him, which in the long run could make the situation worse. I hear a bankruptcy stays on your record for seven years...would his credit be impacted because of a few mistakes I made prior to our marriage?

Should there be anything else specifically I would need to consider before filing?

Any heads up would be appreciated.

Answer
You have received a lot of misinformation about bankruptcy.  I will try to answer your questions.

First, you do not "write off" debts in a bankruptcy.  "Writing off" is an accounting term and has nothing to do with bankruptcy, nor does it have anything to do with the obligation to repay a debt.

You cannot pick and choose which debts are listed in a bankruptcy case.  You must list all assets and debts.  (see my article on this at http://bklaw.com/bankruptcy-blog/2008/07/can-you-only-bankrupt-certain-debts/).   Student loan debts are not dischargeable in bankruptcy (unless you seek and prevail at trial on a claim of undue hardship), so you will still owe that debt.   As for your credit card debts, they will be discharged.  However, you can voluntarily reaffirm any debt.  A reaffirmation is a new contract entered into promising to repay all or a portion of a debt.  There's rarely any rational reason for doing so, but it is available.

As far as impacting your future husband's credit, as long as you file your bankruptcy case before you get married, it should not impact him at all.  The bankruptcy will be on your record for 10 years, but you can start rebuilding your credit immediately after filing a Chapter 7 case.

Mark J. Markus, Attorney at Law
Handling exclusively bankruptcy law cases in California since 1991.
http://www.bklaw.com/
bankruptcy blog: http://bklaw.com/bankruptcy-blog/
Follow Me on Twitter:  @bklawr