Community Property
Property of the estate includes:

All interest of the debtor and the debtor’s spouse in community property as of the commencement of the case that is

  • under the sole, equal, or joint management and control of the debtor; or
  • liable for an allowable claim against the debtor, or for both an allowable claim against the debtor and an allowable claim against the debtor’s spouse, to the extent that such interest is so liable.

11 U.S.C. 541(a)(2). This means that, even if only one spouse files a bankruptcy estate, in most instances the entire community property of the couple will be property of the bankruptcy estate. The corollary to this provision is that all creditors entitled to be paid from community property may file a claim against the bankruptcy estate even if the debtor spouse is not personally liable for the debt. In the latter instance, however, the claim is only entitled to be paid from the community property, not from the debtor’s separate property.

Note: The entire community comes into the bankruptcy estate even if one spouse files after marital status has been severed as long as the community property has not yet been divided. See In re Mante, 153 F.3d 1082, 1085 (9th Cir. 1998) (citing with approval In re Miller, 167 B.R. 202 (Bankr. C.D. Cal. 1994)).



Suggested Reading
Divorce & Money: How to Make the Best Financial Decisions
This book is a practical guide to evaluating assets during divorce. It explains how to determine the real value of marital property including houses, businesses, retirement plans and investments and how to negotiate a settlement that is fair to both sides.

Authors: Violet Woodhouse & Dale Fetherling


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