Do I Have to File for Bankruptcy with my Spouse?

Debtors who are married often wonder if they are required to file for bankruptcy with their spouse.  The answer to this question is no; a debtor is not required to file for bankruptcy jointly with their spouse if they are married.  There is nothing in the bankruptcy code that prohibits one spouse from filing by his or her self.  While there are no limitations to being able to file for bankruptcy singly, it is important to discuss your situation with an attorney to determine if it is in your best interest to do so.

If a person files for bankruptcy individually, it will not negatively affect their spouse or their spouse’s credit.  However, it is important to pay attention to if there are any joint debts that you and your spouse share.  If there are joint debts, the filing spouse’s liability for the debt will be eliminated, but the non-filing spouse can still be held liable for the debt and may be pursued by creditors.  In that case, the non-filing spouse’s credit may be affected.  If there are joint debts, it might be beneficial to file a joint bankruptcy so both party’s liability for the debt is eliminated.  Any debt that is in joint names or any debt in each party’s individual names would be discharged through the bankruptcy.

If a person’s spouse only has debt that is not able to be discharged, such as student loans, certain taxes, alimony, child support, etc., or secured debts they are current on and wish to keep, they can continue to make those payments without needing to file for bankruptcy.  They do not need to file jointly just because they are on certain secured debts together.  Secured debts are those that are protected by collateral, such as a house or a car.  For instance, if both spouses’ names are on a car loan or a mortgage and the loan or mortgage is current and the property is going to be retained, both spouses do not need to file just because their name is on the property jointly.  The non-filing spouse would not be affected by the filing.  However, if only one spouse files for bankruptcy, and the loan or mortgage becomes delinquent, or the property is foreclosed or repossessed, the non-filing spouse would then be responsible for any deficiencies.

Some people may think that filing for bankruptcy singly while married is a good way to avoid becoming over-median if one spouse’s income is much higher than the other’s; however, this is not the case.  If a debtor files for bankruptcy without their spouse, their spouse’s assets, property, and debts would not be included in the bankruptcy, but their income would be.  The non-filing spouse’s income is included for purposes of determining median income as long as the married couple is living together.  That is based on the assumption that if a married couple is living in the same house, they are sharing income and expenses.  If you are married and living with your spouse, his or her income will have to be included to determine your eligibility to file a Chapter 7 bankruptcy.

As always, it is important to discuss what your best options would be with a bankruptcy attorney.  They can review your situation and let you know if filing jointly is a good option, or if it might be in your best interest to file by yourself.

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