Many couples I meet with ask whether they must file bankruptcy together because they are married. The short answer is no, one spouse can file without the other joining on the bankruptcy petition.
Whether it is a good idea for one spouse to avoid filing requires a full analysis of the relationship and the debt both individuals are facing.
For example, if a couple has recently married such that most of the debt is only the responsibility of one spouse because it was incurred prior to the marriage, it may not be necessary for the spouse with little or no debt to join in the filing. The same might apply if a married couple keeps their accounts and debts carefully separated with an agreement not to commingle income and keep their debts separate. As long as one spouse can be sure that they are not liable for the debts of the other, they may not benefit from a bankruptcy discharge, and might want to avoid the bankruptcy filing.
In California, most debt incurred by either or both spouses “after” marriage is considered community debt, and thus the obligation of both spouses even if it is only in the name of one spouse. Consequently, if most of the debt of one spouse was incurred after the marriage, it is often better for both spouses to join in the bankruptcy petition even if the other spouse did not create the debt or apply for the credit. The concern is that creditors may still pursue the non-filing spouse after a bankruptcy discharge of the other although there would be restrictions on which assets the creditor can pursue.
There are also instances when spouses cannot file together because one of them has filed a prior case too recently to qualify for a new case under the same or different Chapter. Income considerations will also play a part in qualifying for a bankruptcy, and that may also help determine whether both spouses can file together and qualify for the Chapter they want to file.
Finally, if it is critical for one spouse to retain good credit, or if a bankruptcy could affect their employment prospects, that spouse might not want to join on the bankruptcy petition.
It is important to consult with an attorney prior to filing bankruptcy to learn the advantages and disadvantages of filing with or without your spouse.
For more information or a consultation, please call 661-210-5657, or e-mail mjf4bk@ca.rr.com.