It isn’t just marriage that can get you roped in to a bankruptcy case that isn’t your own.
Own community property and a bankruptcy filing by your spouse or your soon-to-be ex can drag you into a bankruptcy court.
But the issue is broader: joint ownership of any kind of asset in any state, community property or not, exposes you to a loss of control of your property if your co owner files bankruptcy.
The bankruptcy court has the power to force the sale your property or require you to buy out your co owner. On a timeline not of your choosing.
Co owners at risk
If your partner in a business or a piece of real property files bankruptcy, the partner’s interest may be sold for the benefit of your partner’s creditors.
And since the sale price of just your partner’s interest in the property would probably be less than the fraction of the partner’s ownership, the Bankruptcy Code gives the bankruptcy trustee the power to sell your interest too. [Read more…]