Bankruptcy Just For Her?

Latrell's credit is bad, so they've decided to work on her husband's credit in order to qualify for a mortgage. Can she file bankruptcy for just her debts?

QUESTION: Latrell in Nashville and her husband plan to purchase a home within the next year or so. Her credit is bad, so they’ve decided to work on her husband’s credit in order to qualify for a mortgage. She has $104,000 in debt, and $92,000 of that is a student loan. He has $13,000 in debt, with $7,000 of that being a repossession on a car he co-signed for. Can she file bankruptcy for just her debts?

ANSWER: You don’t get to file bankruptcy for just certain things. By the way, student loans are not bankruptable. You will still have all the debt. Almost all your debt is student loan debt.

I want you to get a house, but I don’t want your house to get you. I want the house to be a blessing for you and not a curse. Neither one of you have done very well with money. If we take out your student loan, which is a big mess, then you guys are fairly equal in terms of the amount of debt that you have.

What I would beg you to do is you need to lay a stronger foundation in your life before you buy a home and that means both of you need to get your debts cleaned up. To be as kind as I can be, I think you’re asking the wrong question. I don’t want to look for a way to escape this situation through bankruptcy, I want to clean up and get a good, organized plan in your life where you have control of money. Buying a house when you are broke and deeply in debt is going to do nothing but bring you problems.

Instead, buy a home when you get yourself cleaned up and have learned to live on a plan and have a sense of power, a sense of dignity, a sense of having control of your money for a couple of years. Neither of you have ever had that, and I didn’t either during the old days. I know what stupid looks like. I’ve done stupid with zeroes on the end.

I would just beg you to say to yourself that before you try a marathon, let’s run around the block a time or two. Buying a house is a marathon, and the trips that you guys have made around the block haven’t been successful yet with money.