Does a Spouse Have to Jointly File Bankruptcy?
If you have become overwhelmed with debt and see no chance of financial recovery in the near future, bankruptcy may be an appropriate option for obtaining debt relief. Bankruptcy can stop collection activity such as phone calls, letters and civil lawsuits initiated by creditors to recover your debt. If you are married, you may wonder if you and your spouse have to file jointly. Joint bankruptcy filings are not mandatory; however, you should consider several factors before deciding whether to file bankruptcy without your spouse.
Other People Are Reading
-
Joint Debt
-
If you and your spouse are both listed on a debt, filing bankruptcy alone may make your spouse solely responsible for repaying the debt. This means that, after the bankruptcy discharge, the creditor may pursue collection activity to recover the debt balance from your spouse. However, if you opt for Chapter 13 bankruptcy, which requires you to make payments toward your debts over three to five years, you may opt for a co-debtor stay. This allows you to protect your spouse from collections as long as you make your payments each month.
Community Property State
-
If you live in a community property state, you and your spouse both own all property you acquire after marriage. In community property states, filing bankruptcy alone will not protect any assets your spouse acquired after marriage. Subject to your state's bankruptcy exemptions, the bankruptcy trustee may elect to liquidate the property to pay your creditors.
-
Exemption Amounts
-
Both federal and state laws provide bankruptcy exemptions you can use to protect some of your property from liquidation. Exemptions are commonly available for your primary residence, personal property and vehicles. In some states, you may double the amount of the exemption if you and your spouse file bankruptcy jointly, but not if you file alone. For example, Alabama provides a $5,000 exemption for equity in your residence; however, if you and your spouse file jointly, the exemption is doubled to $10,000.
Credit Damage
-
If you and your spouse have joint debt, your bankruptcy filing may be noted on your spouse's credit report. However, if you do not hold any debts jointly with your spouse, your bankruptcy filing will not typically affect your spouse's creditworthiness if you file alone. If you apply jointly for a loan after your bankruptcy, your potential lender will likely obtain copies of both your credit file and your spouse's credit file. This may negatively affect your ability to qualify for joint loans in the future.
-
