Bankruptcy for Married Couples: Filing Options

Married couples can file jointly for bankruptcy or one spouse can file separately; which option is better depends on your debts, assets, state law, and more.

If you are married and considering bankruptcy, you'll have to decide whether to file separately (that is, only one spouse files for bankruptcy and the other is not part of the case) or jointly (both spouses file together). This decision is important: It may affect how much of your debt is discharged and how much of your property you get to keep (in Chapter 7 bankruptcy). Which option is better depends on your situation and your state law.

    When Joint Filing Might Make Sense

    If you file jointly for bankruptcy, all property of both spouses is part of the bankruptcy estate, and all debts of both spouses are included in the filing. If both of you are facing debt trouble, either as a couple or separately, and considering bankruptcy, filing jointly allows you to put all of your information on one set of forms, pay only one filing fee, and pay only one lawyer (if you decide to hire one).

    Filing jointly might be the best option in certain situations, including these:

    • You live in a community property state (Alaska, Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington, or Wisconsin), most of your debts were incurred during marriage, and most of your property was acquired during marriage. In community property states, everything earned during the marriage and all property bought with those earnings are community property, and debts incurred during the marriage are community debts. Whether both spouses file or only one, all community property and debts will be part of the bankruptcy case. In this situation. filing jointly allows both spouses to discharge their separate debts and to take part in decisions that will affect their jointly-held property.
    • Your state's exemption laws allow spouses to double their exemptions. If doubling exemptions will allow you to keep property you would otherwise lose, filing jointly might be a good idea. (To find out your state's rules, see Bankruptcy Exemptions -- What Do I Keep When I File For Bankruptcy? and select your state from the bottom of the page.)

    When Filing Separately Might Be a Better Option

    If you file for bankruptcy separately, all of your separate property and your share of the marital property is part of the bankruptcy estate. (In community property states, all community property is part of the bankruptcy estate, even if only one spouse files. However, the non-filing spouse's separate property isn't part of the estate.) So it might make sense to file separately if the other spouse has significant separate property to protect.

    In some situations, you may have to file separately, regardless of your wishes. For example, if one spouse received a discharge in a Chapter 7 case within the past eight years or a Chapter 13 case within the past six years, that spouse won't be allowed to file another Chapter 7 bankruptcy case. If you and your spouse have separated and your spouse won't cooperate, you may also have to file separately, even if a joint filing would be the better option.

    If you are both willing and able to file for bankruptcy, a separate filing might make sense if:

    • You own property together as tenants by the entirety, and your state excludes such property from the bankruptcy estate if only one spouse files alone. This is especially important if you own your home as tenants by the entirety. Filing separately in this situation could allow you to keep your home, while filing jointly could cause you to lose it.
    • One of you has most or all of the debt, you haven't acquired any valuable property as a couple, and you married relatively recently. In this situation, filing separately will allow the spouse who isn't facing debt problems to keep his or her separate property, maintain a good credit rating, and steer clear of the bankruptcy case altogether.

    Getting Help

    If you have any questions about whether to file jointly or separately, you should talk to an experienced bankruptcy lawyer. As you can see, this decision has important consequences, including how much of your debt will be erased and how much of your property you will get to keep. It might even determine whether you keep or lose your home. With so much at stake, it makes sense to consult with an attorney for help in making this choice, even if you decide to handle the rest of the bankruptcy case on your own.

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