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Community Discharge Protects Non-Filing Spouse

Community Discharge

One of the greatest benefits that bankruptcy affords a non-filing spouse in California is the community discharge protection. When one spouse files for bankruptcy in California the non-filing spouse gets the benefit of a community discharge.

What is A Community Discharge?

In California a creditor cannot seek to collect from the after acquired community assets of both the filing spouse and the non-filing spouse. This means that if your husband/wife filed for bankruptcy and received a discharge then the creditors are not entitled to collect from any of the community assets. These creditors include any for which the non-filing spouse was liable to at the time of filing. The community discharge prohibits creditors from the non-filing spouse from collecting from community assets which may include wages, bank accounts, vehicles, and other personal property. The community discharge does not prevent a creditor from collecting the debt from non-filing spouses separate property. Separate property in California includes property acquired prior to marriage and property acquired during marriage by gifts, bequest, devise, or descent.

Although the community discharge does not remove the non-filing spouses personal liability for any debts that they are contractually obligated to pay, it operates as a protection during the existence of the marriage. As long as the non-filing spouse remains married they are for the most part protected from creditors touching the community property (for most couples this will be the marriage of their property). If a divorce or death occurs then the community protection no longer applies.

Why Does a Non-Filing Spouse Get This Benefit?

When either a husband or wife files for bankruptcy all of the community assets go into the bankruptcy estate and can be used to satisfy creditors claims. When a discharge is received Section 524 prohibits creditors with a community claim from seeking to collect on any community property acquired after filing for bankruptcy. To better comprehend how the community discharge works below is an example of how it operates:

Example: Richard and Amanda are married and reside in California. Richard has $40,000 in credit card debt in his name and Amanda has $10,000 in Medical bills in her name. Richard files for Chapter 7 bankruptcy in California and also lists Amanda's medical bills. Amanda does not file bankruptcy with Richard. Richard receives a Chapter 7 bankruptcy discharge, and as a result of the discharge Amanda's creditors cannot attempt to collect the debt from her community property. Richard and Amanda only have two vehicles that were acquired during marriage and a joint bank account. Assuming these are determined to be community assets, then Amanda's creditors cannot seek to collect from these assets.

Many creditors do not comprehend how the community discharge operates and therefore may still seek to collect from the non-filing spouses community assets. I have found it useful to send the below reminder letter to any creditor who is unaware of the possible repercussions from seeking to collect on these debts:

On (Date of Bankruptcy Case Filing and Filing Spouse's Name) filed for Chapter 7 Bankruptcy in California (Case No.). (Filing spouse's name) received a Chapter 7 bankruptcy discharge on (date of discharge). As you are aware the discharge prohibits any attempt to collect from the debtor a debt that has been discharged. In a case involving community property: There are also special rules that protect certain community property owned by the debtor's spouse, even if that spouse did not file a bankruptcy case. At the time of filing (Filing spouse's name), was married to (Non-filing spouse's name). The bankruptcy case for (Filing spouse's name) listed all community assets as part of the bankruptcy estate. In this case the discharge operated as a community discharge where community claims were discharged for the non-filing spouse. Under Section 524 of the Bankruptcy Code, creditors of the debtor and the non-filing spouse who have a community claim on the date of the filing of the bankruptcy case are barred from asserting a claim against after acquired community property. The resulting Chapter 7 discharge operated as a community discharge of the community claim that (Name of creditor) held. Please be aware that an attempt to collect a discharged debt from the community property from the non-filing spouse violates the discharge and you may be required to pay damages and attorney's fees to the debtor.

Categories: Divorce, Marriage


Michelle, it is not clear from your facts whether the spouse is codebtor (meaning that they agreed through signing or providing authorization to incur the debt). Assuming that they are not codebtors, but merely liable as a result of community property laws then the creditor should not be able to file a lawsuit against them or contact them.(Please keep in mind that this is how the law operates in California, and that Arizona may have a different state view of how community laws operate). If they are a codebtor then the answer would depend on what Chapter of bankruptcy you have filed. Chapter 13 bankruptcy offers protection to cosigners or codebtors in bankruptcy.
Hello! I realize this is an old thread, but I'm hoping Ms. Duenas will see it...as she seems to be VERY knowledgeable on this subject. I live in AZ, which is also a community property state. Can a creditor sue the non filing spouse during the time that the bk has been filed and is ongoing? Or does the automatic stay kick in? I have asked this question and no atty seems to know for sure! Thanks!
Ada, the lender has not gone after the community assets to collect on a discharged community debt when he did this. It appears that he simply filed a motion to lift stay to foreclose on a home that appears to have only been under your husband's name. Listing the home as a community property in the bankruptcy, does not change what is on the loan or on the deed of trust to the home. It does not convert the home into a community property asset.
When your husband filed for bankruptcy and obtained a discharge, you as the non filing spouse obtained the benefit of a community discharge. This means that any community claims from creditors that were listed in the bankruptcy (including your creditors) were discharged as part of the bankruptcy. Community claims are those claims for which your community property could be liable for. What this means is that your creditors cannot collect from your community assets. This does not stop them from being able to collect against any separate property that you may own and that is not community property. If you do not have any separate property then this may mean that your creditors will not have anything from which to collect from.
My husband and I were married on January 12, 2008, he filed bankrupcy in 2010. On the bankrupcy he listed a condo that was in his name. when he filed the bankrupcy he listed it as community property. The lender went around the filing and asked that the property be released from the bankrupcy and it was approved by the court. My husband was unaware that the property had been released until we go notice that the property was being sold. Should the lender be required to pay damages and attorney's fees since we were married and my rights were not protected under code 524.
Ms. Duenas, hubby and I had no assets before we were married 17 years ago. Our home and car were purchased during the marriage. Hubby filed chapter 7 separately, but I am concerned how the community laws will affect 2 huge unsecured credit cards of mine. One was obtained before we were married, and the other was obtained during our marriage. Will these be discharged? Should I be worried? I see these creditors listed in the BK paperwork, but can the creditor "hold" onto the debt in case my hubby dies? I don't get it.
If the community property becomes to be a separate community in the event of a death or divorce, what will happen to my community discharged that protects my spouse? Is all the creditors will go after him for the 100% of the discharged debts? Thank you.
Ms. Duenas,

My wife filed Chapter 13 a few months ago as a single filer. She did not include my single credit card debt. I get a letter from the collection agency who I guess purchase my debt from Chase. It has been a little over 4 yrs. I was served on Nov 17, 2011. I never made single payment ( long story ) I would consider myself to have defaulted after missing the first payment. This is my defense. Can I add any of my wife's chapter 13 info to my Answer?

Thank You

The abstract of judgment that is on the real estate can be removed from your real estate through your husband's <a href="http://socaladvocates.com/chapter7" rel="nofollow">Chapter 7 bankruptcy</a> filing if it meets the requirements for removal. You need to file a motion to avoid the judgment lien as part of your bankruptcy case. Assuming that the judgment lien meets all of the requirements, then you should be able to have it removed as part of your husbands Chapter 7 bankruptcy. If the lien was recorded after the filing of your bankruptcy case then I would consider reopening your case and showing a discharge violation. I would also suggest contacting the creditor and discussing having them voluntarily remove the lien as opposed to dealing with a discharge violation in bankruptcy.
Hello again;
Is the abstract judgement can be discharged and removed from our real estate once my husband completes his own Chapter 7? Like I mentioned earlier, the same creditor filed the abstract judgement without an attroney against our community property without notification and after I received the community discharged and I did listed the creditor on my schdule. Thank you.
I would argue the vehicle lease was a dischargeable community debt and therefore the creditor cannot seek to collect against any of you and your wife's community assets. He can seek collection against her separate property, but not against the community assets. Although he may have a judgment you should fight any attempt to collect on community wages or property. Although the creditor can argue that they did not receive notice, if they were not listed in the bankruptcy. The counterargument would be that in the 9th circuit, (California included) in a no asset case, where creditors would not receive anything, the debt would be treated as discharged even if unlisted. If your bankruptcy case was a no asset case I would dispute any attempt to collect on the debt from your community assets.

what if one spouse files for bankruptcy and the other spouse has a lease that she is unable to make payments under? My bankruptcy was discharged after my wife was late for several payments but prior to the creditor getting a default judgment against my wife and now they seek to collect on their judgment. It seems that the person who leased the property to my wife might have a claim b/c they didn't know that my bankruptcy was going on and they weren't able to try to contest the money she owed....?

Mia who was this judgment against, you or your spouse? If the debt was listed in your bankruptcy case and discharged prior to the filing of the abstract of judgment recording then the creditor is violating the automatic stay. If the debt was for your spouse and it received a community discharge then the creditor also has no right to go after any community assets including real property. First step I would suggest is to contact the creditor's attorney to notify them of the discharge. The creditor may not be aware that they were discharged as part of the bankruptcy. The creditor may agree to voluntarily remove the lien once they become aware.
Need help!! I just found out yesterday that an abstract judgment was recorded against my property from a creditor who has been discharged in 8-10-10. This discharged only under my name but did cover the marital community discharged. How do I proceed to discharged this judgment? Thank you.
The section that applies is section 524(a)(3) which reads in part: "A discharge in a case under this title: operates as an injunction against the commencement or continuation of an action, the employment of process, or an act, to collect or recover from, or offset against, property of the debtor of the kind specified in section 541 (a)(2) of this title that is acquired after the commencement of the case, on account of any allowable <strong>community claim</strong>"
Similar situation here! I was wondering what section in the bankruptcy code 524 covers this community discharge? I want to write a letter to the creditor, referencing this section.

Thanks so much!
Although the creditor may be contacting your husband to try to collect on the debt, they cannot take action that actually seizes or garnishes community assets. Their rights are limited as to what they can do. If at any time you divorce then his property becomes separate and they can collect from his separate property. I do not believe the injunction in your discharge would apply to prohibiting them from contacting your husband about the debt, but in essence their efforts are futile if there is no separate property. Even if they obtained a judgment they could not enforce it against the community assets. If they attempted to do this, they would be violating the discharge in your bankruptcy case. You many also want to have a strongly worded letter drafted through an attorney, which states that if they overstep their bounds you would be seeking sanctions in bankruptcy court.
Question: The creditors are still harassing my spouse even I received the Chp. 7 discharged protecting the community property. I did listed my spouse as co-debtor and all the creditors are his name. There is no separate asset before our marriage and we are still married. I had send the letter explaining the US Code 524 that also protects the community /phantom discharged. Please advise. Thank you

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