You Do Not Have to File Bankruptcy With Your Spouse

You do not have to file bankruptcy with your spouse. You have the option to file:

  1. Individually – If most of the debt is in your name, filing alone may be a better choice. This can protect your spouse’s credit if they are not legally responsible for the debts.
  2. Jointly – If both you and your spouse are responsible for significant debts, filing together may be beneficial as it streamlines the process and can reduce legal fees.
  3. One spouse files, the other does not – If only one spouse has significant debt, the other may not need to file. However, if you live in a community property state, your spouse’s assets and income could still be affected.

Filing for bankruptcy, whether alone or with your spouse, involves several key considerations. Here are some important factors to weigh before making a decision:

1. Type of Debt

  • Joint Debt vs. Individual Debt – If most of your debt is shared, filing together might be the best option. If the debt is mostly in one spouse’s name, an individual filing might be preferable.
  • Secured vs. Unsecured Debt – If you have secured debts (like a mortgage or car loan), consider how bankruptcy might affect your ability to keep those assets.

2. Type of Bankruptcy

  • Chapter 7 (Liquidation) – If you qualify, this can discharge unsecured debts, but you may need to surrender non-exempt assets.
  • Chapter 13 (Repayment Plan) – This is best if you have a steady income and want to keep property while restructuring your debt into a manageable repayment plan.

3. Impact on Credit Scores

  • Filing jointly means both credit scores will be impacted.
  • If one spouse has good credit, an individual filing might preserve their score for future financial stability.

4. Income and Eligibility

  • Bankruptcy eligibility depends on household income. If you file jointly, your combined income will be considered, which could impact whether you qualify for Chapter 7.
  • If your combined income is too high for Chapter 7, Chapter 13 may be your only option.

5. Property Ownership and Exemptions

  • In common law states, an individual filing protects the non-filing spouse’s separate property.
  • In community property states, shared assets may be at risk, even if only one spouse files.
  • Exemptions (state or federal) protect certain assets, but rules vary by state.

6. Legal and Filing Costs

  • Joint filing is often cheaper than filing separately, as you only pay one set of court and attorney fees.
  • If one spouse files, the non-filing spouse might still be responsible for joint debts.

7. Future Financial Goals

  • If you plan to apply for a mortgage, loan, or credit together in the near future, consider the impact of bankruptcy on both credit scores.
  • If one spouse has good credit, keeping that intact can help with future borrowing.

Would you like advice tailored to your specific situation? Please fill out the contact form and we will be in touch within 24-48 hours!

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