Can I File Bankruptcy While Legally Separated in Washington?
Filing for bankruptcy protection can be an option of last resort if you find yourself burdened with debts that you cannot realistically repay. If you are a Washington resident and are legally separated, you may choose to file for protection under the bankruptcy code individually or jointly with your spouse. While the laws of the state of Washington apply to your legal separation, bankruptcy is federal in nature and therefore governed by federal rules and laws.
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Legal Separation
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A legal separation is very similar to a divorce. Couples who go through a legal separation can address issues of marital property and debts as well as child custody and support. When a judgment for legal separation is entered, the main difference between that judgment and a judgment for divorce is that you are still legally married. Because you are still legally married, you have the option to file your bankruptcy case jointly with your spouse or individually.
Bankruptcy Basics
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The process begins by filing a petition for bankruptcy under the appropriate chapter. Most individuals use either chapter 7 or 13. To qualify to file under a chapter 7, your income and assets must be below a certain limit as determined by the "means test" used by the bankruptcy courts. In a chapter 7, all nonexempt assets are sold to satisfy creditors and then all remaining dischargeable debts are forgiven. In a chapter 13 bankruptcy, you enter into a repayment plan that allows you to repay the majority of your debts over an extended period of time.
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Filing Individually
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Often, when a married individual wishes to file for bankruptcy without including the spouse, it can create issues for the spouse down the road. Joint debts, for example, may become the sole responsibility of the spouse who did not join in the petition if the filing spouse is able to discharge the debt. If you already are legally separated, however, you likely have divided up all the debts and assets of the marriage, which makes filing as an individual somewhat more practical. It is important, however, to note that although a legal separation decree may order one party to be responsible for a joint debt, if the debt remains unpaid, the creditor still may be able to seek repayment from the other spouse.
Filing Jointly
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If both you and your spouse are having financial troubles, filing jointly may be the better option. By filing jointly, you incur less costs and avoid the need to duplicate many documents. In addition, if your spouse files as a joint debtor, you can be assured that all joint debts that can be discharged are discharged with respect to both debtors. On the other hand, if your spouse has considerable income or assets that could prevent you from being able to file a chapter 7, you may wish to proceed alone. Consult with a bankruptcy attorney before making a decision.
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