How Should Married Couples File Bankruptcy?
When filing for bankruptcy, most married couples file a joint petition but a joint filing is not required and both a husband and a wife can individually file a bankruptcy without their spouse.
Each person who files a bankruptcy gets bankruptcy relief for his or her own debts. When one spouse files a bankruptcy petition without the other spouse, for example, a wife files without her husband, her bankruptcy will deal only with her debts and not her husband's debts. Bankruptcy petitions are filed under social security numbers, and her bankruptcy will not include his social security number. If they live in the same household, the husband's income will be considered only to the extent that it is contributed to the household expenses of the filing spouse.
Sometimes, a spouse may have a valuable property that would have to be sold in a Chapter 7 bankruptcy, perhaps an antique car that he dotes on. In that case, that spouse may not wish to file for bankruptcy. Or, all of the debt may be in the name of the filing spouse only, so that the non-filing spouse's credit will remain untouched by the bankruptcy of the spouse. Or the non-filing spouse may have inherited property with siblings and that property may have substantial equity. In those cases, it may be more desirable to file individually.
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However, in Chapter 13 bankruptcy, a co-debtor stay goes into effect when the case is filed. This means that one spouse's bankruptcy filing can stop a foreclosure on jointly-held property, permitting the filing spouse to catch up on mortgage arrears. Or, it can stop a joint credit card lender from suing the non-filing spouse to collect a joint debt. While a Chapter 13 filing may not eliminate joint liability on joint debt, it may provide for repayment timing of the joint debt.
If you or your spouse is considering filing for bankruptcy, contact our consumer bankruptcy attorneys to discuss your options.