Can I File Bankruptcy without My Spouse?
One common question among married people considering filing for bankruptcy is whether just one of them can file without their spouses. The answer is yes, but deciding whether a single filing or a joint filing will best fit your needs requires you to consider a lot of factors, including:
- The laws where you live
- What kind of property you have, and whose name it is in
- What kind of debt you have, and whose name it is in
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Marriage, Debt & Bankruptcy
So the question is: If you are married, can you file bankruptcy individually? Again, in many cases a married filer can file an individual bankruptcy petition – but he or she should consider these factors before deciding.
- Joint vs. individual debts: When considering whether to file alone or with your spouse, it's a good idea to look at what kind of debt you're hoping to eliminate. Joint debts are generally those that both spouses signed (or co-signed) for, but the analysis can be more complex than simply whose name appears on the credit card, particularly in a community property state. If the majority of debts are the individual debt of one spouse, the person with the high debt load might choose to file an individual bankruptcy case. Keep in mind that filing Chapter 13 can prevent creditors from going after cosigners, but Chapter 7 typically will not.
- Household income: In order to file under Chapter 7 of the U.S. Bankruptcy Code, a filer must pass a means test, the first step of which consists of comparing the filer's income to the median income in your state. Even if you intend to file singly, though, your entire household income will likely be used to determine whether or not you pass the means test, which may make it more difficult to qualify for Chapter 7.
- Limited protection from the court: When you file for bankruptcy jointly with your spouse, both of you get the court's protection from debtors; however, if only one spouse files, the other spouse will still be responsible for repaying any jointly held debts. In some cases, this may mean that creditors continue to pursue the non-filing spouse.
- Equitable distribution vs. community property: Another consideration is what types of property laws your state has. In equitable distribution states, each spouse is typically considered to own whatever he or she came into the marriage with as well as half of all jointly owned property. In community property states, though, all property that a couple got since the beginning of their marriage is generally considered to be equally owned by each partner.
Credit, Marriage & Bankruptcy
Worry about protecting a spouse's credit rating in a bankruptcy filing may be a reason why a married person would consider filing a solo bankruptcy petition, but before you make your decision, it's best to take into account all the factors listed above and others.
As you can see, the laws governing how bankruptcy works in marriages are complex and nuanced. To find out whether a joint or single filing is likely to best suit your needs, speak with a bankruptcy attorney today.