No one looks forward to filing bankruptcy. And the last thing anyone wants is for it to negatively impact their family. But what if you and your spouse are struggling with debt and bankruptcy is the only option? Can one spouse file bankruptcy without the other, or should you file together?
Below, we discuss the factors you will want to consider when deciding whether to file individually or jointly. A Minneapolis bankruptcy attorney can help you evaluate your situation and determine which option best suits your situation. Contact Gregory J. Wald, Attorney At Law to learn more.
Understanding Bankruptcy Options for Married Couples
If you and your partner are deep in debt and wondering whether file bankruptcy separately or together, it’s important to be aware of the pros and cons of each option.
Filing a joint bankruptcy petition has a couple of advantages:
- Automatic stay: Both spouses will benefit from the automatic stay, which stops all collection actions.
- One filing fee: Filing jointly requires a single filing fee, as opposed to filing two separate cases with two filing fees.
However, the decision to file alone or jointly also depends on a few key considerations. It may be better to file individual bankruptcy if:
- Most of the debt is in your name, and not jointly-held.
- You don’t want both spouses’ credit scores to suffer the negative impact of bankruptcy.
- The bankruptcy could jeopardize your spouse’s assets.
We discuss these considerations in more detail below.
How Much Jointly-Held Debt Do You Have?
Just because you are married doesn’t mean that you are automatically responsible for your spouse’s debts. You are both on the hook only if your debt is under both of your names.
If you have a significant amount of jointly-held debt, it may be a good idea to file a joint bankruptcy petition. That’s because if you file individually, your jointly-held debt will become the sole responsibility of your spouse. A joint petition could help ensure that your non-filing spouse isn’t overburdened with any additional financial liability.
How Will Bankruptcy Impact Your Credit Scores?
Filing jointly, however, means that both of your credit reports will be negatively impacted. This could affect your ability to purchase a home or vehicle in the future.
If you have more debt than your spouse (and your spouse would like to maintain a decent credit score), you may be better off filing an individual bankruptcy petition. This way, only your credit score will be adversely affected. Your spouse would have check their credit regularly in order to ensure that your bankruptcy doesn’t appear on their report; and if it does, they should act quickly to have it removed.
How Will Bankruptcy Affect Your Spouse’s Assets?
Because Chapter 7 bankruptcy involves the liquidation of assets within the estate, filing jointly means that both party’s assets will be sold in order to settle those debts.
Therefore, if your spouse has assets that are only in their name and you’re the one with the bulk of the troublesome debt, you’ll want to consider filing individually. Any property that your spouse solely owns will not be included in the bankruptcy estate and will be safe from liquidation.
Can One Spouse File Bankruptcy? Ask a Bankruptcy Attorney
Whether or not to file bankruptcy as an individual or a couple is a weighty one, and depends on several factors. And it’s less a question of “Can one spouse file bankruptcy?” but more “Should they?” A Minneapolis bankruptcy attorney can examine your situation and help you understand your options. To learn more, contact Gregory J. Wald, Attorney At Law today.