Both husband and wife has to file bankruptcy?

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Latest post Fri, May 22 2015 1:43 PM by ca19lawyer2. 9 replies.
  • Thu, May 21 2015 4:24 PM

    • scorpiol
      Consumer
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    • Joined on Thu, May 21 2015
    • WA
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    Both husband and wife has to file bankruptcy?

    Hi,

    This is a question about a couple in WA state.

    My friend is considered at fault in a car accident and other driver is threatening to sue her. My friend does not have an income ..she is just housewife. But her husband has income of about 50k year.

    They also have a home which is in their joint name and it 100%  paid off. In WA state 125k is homestead exemption.

    Now if the other driver actually sues and win through settlement or trial, judgement would be against both of them or just against her because she is considered at fault and she was the only one who was driving. Even though car is registered to her husband's name ...her husband has nothing to do with it ...as he was busy at work. 

    Still as per law they both will be resonsible for judgment ? if she declares bankruptcy this judgmenet and claim will be gone? or her husband also have to file bankruptcy as well?

    Also, to satisfy this judgment her husband's salary could be garnished unless he files bankruptcy?

  • Thu, May 21 2015 4:42 PM In reply to

    Re: Both husband and wife has to file bankruptcy?

    Seriously?

    Have you never heard of

    CAR INSURANCE?

    Does your friend and her husband have

    CAR INSURANCE?

     

    • The right of the people 
    • to keep and bear arms,
    • shall not be infringed.
  • Thu, May 21 2015 5:32 PM In reply to

    Re: Both husband and wife has to file bankruptcy?

    Washington state, like all other states, requires that drivers have automobile liability insurance to cover damage caused to others caused by the driver’s negligence. So Jack’s question here is a good one: did she have that insurance? Also, was she convicted for a DUI for this accident?

    The injured person would sue your friend, not her husband, as it was the friend who caused the accident. If the injured person gets a judgment against your friend, that judgment will allow the injured person to go after any non exempt assets or income that your friend has. Washington is a community property state. Thus, your friend has a community property interest in her husband’s wages. The injured person could therefore attach some of your friend’s husband’s salary to collect the judgment. In injured person could go after her non exempt interest (if any) in the house.

    If she caused the accident becuse she was DUI, then the judgment would not be dischargeable in bankruptcy. Otherwise, it may be dischargeable. Whether it would be adviseable for both of them do the bankruptcy is something they’d neeed to discuss with a bankruptcy attorney.

    But hopefully your friend had sufficient insurance to cover this. Just buying the minimal coverage the state requires is really not good enough. It doesn’t take much to exceed that small amount of coverage. Buying extra coverage doesn’t cost all that much, and it can save a person from financial ruin in a situation like this.

  • Thu, May 21 2015 5:40 PM In reply to

    • scorpiol
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    • WA
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    Re: Both husband and wife has to file bankruptcy?

    They have WA state min. coverage which is 10k/25k

    So my main concern was ...if her husband has to file bankruptcy too?

  • Thu, May 21 2015 6:42 PM In reply to

    • Kivi
      Consumer
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    • Joined on Sat, Jan 1 2005
    • CA
    • Posts 6,360

    Re: Both husband and wife has to file bankruptcy?

    As Taxagent indicated, WA is a community property state, so she has a "community interest" in his earnings and she has an interest in the house that they own. You don't say how the house is titled, but most married couples do hold title jointly.

    The correct answer would need to come from a BK attorney in your state. I would state that the means test for filing a chpater 7 bankruptcy does consider "household" income. The fact that she does not work or have an income of her own may not, in an of itself, be sufficient for only her to file for BK protection. The BK trustee is going to look at the fact that her husband supports her and factor that aspect of her living situation into the issue of whether she does or does not pass the "means" test.

    I would bet even money that both of them likely will need to file if they want to avoid the unpleasant consequences of that judgment against her. But, this one really does need to be discussed with a BK attorney.

  • Fri, May 22 2015 8:15 AM In reply to

    Re: Both husband and wife has to file bankruptcy?

    scorpiol:
    My friend is considered at fault in a car accident

    Considered at fault by whom (aside from the other driver)?

     

    scorpiol:
    Now if the other driver actually sues and win through settlement or trial, judgement would be against both of them or just against her because she is considered at fault and she was the only one who was driving.

    I think you may have intended this to be a question, although you did not use a question mark.  Whether or not the judgment would include your friend's husband depends primarily on whether the other driver sues your friend's husband and whether there are any facts to support doing.  The abstract possibility certainly exists that grounds for including the husband may exist.

     

    scorpiol:
    Still as per law they both will be resonsible for judgment ?

    So...this time you've used a question mark, but this sentence isn't actually a question.  Or was it intended to be the same basic question I answered above?  If it was intended not to be a question, what law do you think would make both responsible?

     

    scorpiol:
    if she declares bankruptcy this judgmenet and claim will be gone? or her husband also have to file bankruptcy as well?

    If she files BK and is discharged, her liability would be extinguished.  However, if only she filed BK, it likely wouldn't affect her husband's liability.  Of course, we have no way of knowing whether either or both of them qualify for any particular type of bankruptcy.

     

    scorpiol:
    Also, to satisfy this judgment her husband's salary could be garnished unless he files bankruptcy?

    Possibly.

  • Fri, May 22 2015 8:22 AM In reply to

    Re: Both husband and wife has to file bankruptcy?

    scorpiol:
    They have WA state min. coverage which is 10k/25k

    Ummm...no.  Minimum required coverage in Washington is 25k/50k/10k.  See http://www.dol.wa.gov/driverslicense/insurance.html

    Is the other driver claiming injuries in excess of $25k and/or damage to his/her car in excess of $10k?

     

    scorpiol:
    So my main concern was ...if her husband has to file bankruptcy too?

    Absolutely not.  No one is ever required to file BK.

    Honestly, you're putting the cart before the horse here.  You haven't given any indication that the other driver's damages won't be covered by your friend's insurance coverage.  Keep in mind that the insurance carrier has a duty to try and settle the other driver's claim within the limits of the policy.  And, if the other driver does sue, the insurance carrier also has a duty to hire a lawyer to defend your friend and try to settle the claim within policy limits.  Only if it appears clear that a settlement within the policy limits isn't possible should your friend even be considering BK.

  • Fri, May 22 2015 1:06 PM In reply to

    • scorpiol
      Consumer
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    • Joined on Thu, May 21 2015
    • WA
    • Posts 4

    Re: Both husband and wife has to file bankruptcy?

    Their own insurance company considered she is at 100% fault even though she does not agree ...she thinks other driver cut in front of her and that is why she ended up rear ending other driver...and her insurance company says even though she cut in front of her ...its her fault. She also saw open container in her car but police did not even mention about it in report.

  • Fri, May 22 2015 1:08 PM In reply to

    • scorpiol
      Consumer
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    • Joined on Thu, May 21 2015
    • WA
    • Posts 4

    Re: Both husband and wife has to file bankruptcy?

    Other driver is asking diminished value claim of 4k so total she is asking 14k ..while her property damage cover is only 10k...so even though its only 4k ..she is threatening to sue and you know once it goes to lawyers its always more...also her personal injury liability is 25k ...she does not know anything about personnal injury claim as of yet but my friend is worried that if it goes to lawsuit ...it will skyrocket and that is why she wants to take steps necessary.

  • Fri, May 22 2015 1:43 PM In reply to

    Re: Both husband and wife has to file bankruptcy?

    scorpiol:
    Other driver is asking diminished value claim of 4k so total she is asking 14k ..while her property damage cover is only 10k...so even though its only 4k

    This doesn't make a lot of sense.  Are you basically saying that the other driver is, in fact, seeking more than the $10k limit of the policy?  Has the insurer offered to pay the $10k policy limit?  If so, has the other driver rejected that offer?

     

    scorpiol:
    you know once it goes to lawyers its always more.

    I don't know any such thing.  Nor can I conceive why someone might involve a lawyer for a $4k ($14k - $10k) property damage claim.

     

    scorpiol:
    she does not know anything about personnal injury claim as of yet but my friend is worried that if it goes to lawsuit

    Then she should talk with the adjuster at her insurance company who is handling the claim.  The adjuster will certainly know if the other driver is claiming any injuries.

     

    scorpiol:
    my friend is worried that if it goes to lawsuit ...it will skyrocket and that is why she wants to take steps necessary.

    Steps necessary for what?

    Filing bankruptcy because something MIGHT happen is silly.  Moreover, it's not like there's any rush.  If, in fact, the other driver sues -- and, honestly, I suspect the other driver will back down unless she has SIGNIFICANT injuries in excess of policy limits -- your friend will have plenty of time to file bankruptcy.  Lawsuits take several months -- at a minimum -- to complete.  Your friend should be focusing her energy on making sure her insurer resolves the claim within the limits of the policy.  She and her husband also need to give serious consideration to increasing their policy limits going forward.

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