Say you are in a situation where you and your spouse have been left with debt that you cannot pay back. Perhaps this debt is listed under a joint account, or in other words, both of your names are on the contract and you have both agreed to be legally responsible for this debt. If you feel that there is no way out other than to file for bankruptcy, do both of you have to declare bankruptcy, or just one of you?

There are several situations in which you can do either one or the other. Joint accounts, seperate accounts, divorces, separations, and debts incurred prior to marriage are some of the things that affect the decision of whether or not to file together or separately. Here are a few of those circumstances.

First of all, you are usually not obligated to file together. You are usually not obligated to file alone, either. The only catch is, that if you want to file together, both spouses have to agree to do so, otherwise you must file individually.

1. Separation

If you and your spouse are separated, you do not have to file together. However, if your accounts to which you are indebted are joint, or in both of your names, you will probably want to. If you are separated and your spouse has debts that they want you to go bankrupt with them for, you don’t have to because it’s technically not your debt, and therefore you will not be obligated to pay for it just because your spouse cannot.

2. Debt Incurred Before Marriage

If your spouse was in debt before you got married, you are not obligated to pay for their debt, ever. However, if you choose to add your name to the contract, making you a cosigner, then you are obligated. This makes it a joint account for which you are also accountable for.

3. Joint Accounts

If you are still together and you have a joint account to which you owe money, you are both legally responsible to pay back the money that was borrowed. Whether it be a loan, mortgage, or credit card account, you are both under the same obligations. If you have no other way out except bankruptcy, filing for it jointly, just as you filed for the credit account jointly, will be your wisest move.

Because you are both obligated under the contract to pay the debt, you want protection from that debt for both of you. If you file for bankruptcy individually, the spouse that filed will be the only one relieved of that debt, while the other will still be hounded by creditors and collection agencies to pay. Filing together will hurt both of your credit reports, but it will protect you both from the responsibility of paying off the debt.

You may be wondering what a charge off is, and why the creditor representatives keep telling you that if you do not pay the money that you owe that they will “charge-off” your account. There are a few things you may want to know about charge-offs, like how they work, how seriously damaging they are to your credit report, and when your collection account becomes a charge-off. Here are some of the myths and assumptions that some people get caught up in about charge-offs, and the facts that set those myths straight.

Myth: A charge-off is a cancellation of your account

A charge-off is not a cancellation of your credit account. They usually prohibit you from charging any money on your account long before they even consider a charge-off if you have failed to pay your debts. Closing your account simply removes your privilege of charging on the credit card account that you owe money on, which action does not affect your credit report nearly as much as a charge-off.

Myth: Getting a charge-off is the end of the world

When a collection account becomes a charge-off, it certainly does damage to your credit report. It is unavoidably true that if your account is charged off, you usually still have to pay the amount that you owe, plus you have a “bad debt” mark on your credit report that will affect your ability to get credit in the future for a long time. However, it is not the end of the world, because it can be repaired over time with renewed credit charging and payment habits that you can attain gradually.

What IS a charge-off?

A charge off is not when they close your credit account. It is not a bad mark on your credit report that will ruin you forever and take away your ability to get a loan or another credit card. A charge-off is what happens when you do not pay the money that you owe and the creditor is forced to zero out the debt on their financial ledgers. That means that in their books, it shows that you no longer owe them money, because they cannot afford to have a large negative balance.

You end up paying for a charge of not only by paying back the debt you owe, but by punishment to your credit report. This mark on your credit report will be what creditors will use to devastate your financial situation to basically get you back for their having to do a charge-off. However, though your credit report will be hurt because of this, it can be slowly repaired, as I said before.

When does a charge-off occur?

Usually, your collection account becomes a charge-off around six months after the time of nonpayment. This means that if you have not paid your bills for six months, you either already have gotten a charge-off or you are very close to having your account become so. Six months is the amount of time that your creditors have before they are forced to zero out the balance on your account.

Unfortunately, if you have failed to pay your bills on time and have ignored the inquiries of the collection agencies to you to pay the amount you owe and are behind on, you can be sued. However, it is not the collection agency’s responsibility to do so. In fact, a collection agency itself cannot sue you because you do not pay off your debt unless they are a collection law firm. It is the company or the creditor to whom you owe money to that will sue you for not paying them the money that you owe them on time.

Not only are collection agencies prohibited from suing you, but you are NOT prohibited from suing THEM. There are certain circumstances in which you may feel you have been wronged by a collection agency. If you feel this way, that the law has been broken by something that the collection agency has done or said to you, then you can file a formal complaint and take that collection agency to court.

The thing that collection agencies are most commonly sued for is harassment. Harassment is prohibited by the law when collection agencies are trying to reach the person who owes the money. Here are a few examples of harassment that you have the power to sue for if you are under similar circumstances.

Excessive Phone Calls

If a collection agency is calling you several times a week on behalf of the same creditor, or because of the same form of credit to which you are indebted to and have failed to pay on time, they are breaking the law. Collection agencies are not allowed to contact anyone more than three times a week to inquire about the same overdue payment. If something like this occurs, track the date and the time at which you were called each time, and then you will have proof once you make a formal complaint against them in court.

Threats

Some collection agencies threaten the people that they call to attach their wages in order to get the debt paid. This is illegal only if they are only making hollow threats and do not really intend to do so. If they really do take action to legally attach your wages to get the debt paid, then there is no valid reason for you to sue them. Make sure that you have proof that they did not fully intend to do that before you file a complaint, otherwise you will lose.

Make Sure Your Complaint is Valid

When you take a collection agency to court intending to sue them, you must make sure that the complaint you are filing against them is valid enough for you to have a strong case. If you go to court and do not have proof of harassment and a legitimate explanation of exactly what happened, with detail to back your story up, you will not be persuasive enough to win the case. It is up to you to track and monitor how you are being treated by collection agencies, and if you find fault in this treatment, use it as proof against them for their crime.