Can I File For Bankruptcy without My Spouse?

People turn to bankruptcy when they feel there is no other method available to them in which to repair their financial situation. The bankruptcy laws were created with this in mind, and are a legal method of allowing a person the opportunity to get a fresh start where their finances are concerned.

WHO NEEDS TO FILE FOR BANKRUPTCY ONE OR BOTH SPOUSES?

Generally the financial dealings of a married couple are considered a joint operation. In many cases this is true. However, when it comes to consumer debt, and in particular credit card debt, each married individual has the opportunity of acquiring an individual line of credit - or credit card. 

Credit reports are also written on an individual basis, not as a couple.  As such, even though married, individuals can wind up amassing a heavy burden of debt upon which they find it impossible to make adequate payments. This holds true even if both spouses work together and attempt to satisfy the monthly debt obligation. 

Given these circumstances, the law allows for a single spouse to file for bankruptcy.  This has advantages in that when the bankruptcy is reported it appears only on one spouse's credit report. However, only the debts of that same spouse will be managed or discharged through the bankruptcy proceedings. Also, though only one spouse may file for bankruptcy, in many circumstances when calculating the income to make payments to creditors, trustees will look at the household income - not just the income of the filing spouse.

 PROPERTY AND SECURED DEBT

Property is generally used to satisfy debt, and in some circumstances jointly owned property can be used to satisfy the debt of the spouse who files for bankruptcy. That property becomes part of what is called the "bankruptcy estate" and is made up of assets owned by the debtor at the time the debtor filed for bankruptcy which can be liquidated and used to satisfy creditors.

Generally, property that is used as the debtor's primary dwelling is not used to satisfy debts during the bankruptcy process. The purpose is to allow the debtor a new start, and a home will be necessary for that to take place. Other jointly owned property can be used, however. In community property states, where all property purchased while married is split between the two spouses, both halves of the community property become part of the "bankruptcy estate."

Secured property that you are making payments on is not generally used in the bankruptcy process regardless of which spouse it belongs to. In order to retain the property, payments simply need to continue to be made.

SEEK ADVICE

Not all circumstances are the same and some details of the process may differ from state to state. No matter what questions regarding bankruptcy you may be seeking answers to, before committing to any action, be sure and consult with a bankruptcy specialist or attorney.