Bankruptcy and The Legally Married Couple

A common question I am asked is whether one spouse of a legally married couple can file bankruptcy separately, without including the other spouse in the bankruptcy filing. This is a very important issue for many married couples contemplating either Chapter 7 bankruptcy or Chapter 13 bankruptcy. The answer to this question is "Yes." Under certain circumstances this can be an excellent way to minimize the effects of bankruptcy on the married couple and still retain the positive benefits of bankruptcy.

If you are considering this course of action to resolve your debt issues you must know only the spouse actually filing for bankruptcy will receive a bankruptcy discharge of his or her debts. The debts of the spouse not filing for bankruptcy will not be discharged or erased. If a married couple considering filing for bankruptcy has debts that are joint, such as joint credit cards, joint auto loans or joint home loans, this type of bankruptcy consideration becomes more difficult. If one spouse files for bankruptcy on a debt that is joint, and is owed by both spouses, only the spouse filing for bankruptcy will get that joint debt erased. The other nonfiling spouse will still owe the full amount of the joint debt. This outcome, of course, would not be an acceptable or positive result of filing for bankruptcy.

Filing for bankruptcy is a serious matter, and if this course of action is chosen by a married couple they must do what provides them with the most benefit. If all of a married couple's debts are joint debts the filing of a bankruptcy by one spouse would not be a benefit. However, if most of the credit card debts are in one spouse's name and the other spouse's name does not appear on the debt, then one spouse might consider filing separately leaving the nonfiling spouse's credit intact for future credit acquisitions. A married couple will frequently request this one-spouse bankruptcy-filing scenario even though the benefits are less than can be achieved by both spouses filing together in a joint bankruptcy petition. The bankruptcy attorney must evaluate these considerations on a case-by-case basis.

Also, an issue can arise where married persons are separated and either in the process of divorce or preparing to file for divorce. If one spouse wishes to file bankruptcy, he or she may be forced to obtain a waiver of exemptions document, signed by the other spouse in order to efficiently file for bankruptcy. These are bankruptcy issues we deal with on a day-to-day basis in our bankruptcy practice.

The goal of bankruptcy is to discharge as much debt as possible — to obtain a fresh start. The bankruptcy attorney must advise married couples of the benefits of filing for bankruptcy whether it be a joint bankruptcy filing or a separate bankruptcy filing.

More on this later.

We are a debt relief agency. We help people file for bankruptcy relief under the Bankruptcy Code.