Does a Spouse Have to File Bankruptcy?

All bankruptcy cases are heard in federal court.

Bankruptcy is a legal process designed to provide honest but unfortunate debtors, who are willing but unable to pay their debts, with a means of obtaining a fresh financial start. Provisions of the United States Bankruptcy Code allow an individual to file for personal bankruptcy and married couples to file a joint petition. Married couples are not required to file a joint petition, however. Married couples may elect to file individual petitions, or one spouse may file for bankruptcy while the other does not.

Types

Two primary types of bankruptcy are available to individuals and married couples: Chapter 7 and Chapter 13. Chapter 7 bankruptcy is sometimes referred to as straight bankruptcy or liquidation bankruptcy, whereby the debtor's non-exempt assets are turned over to a court-appointed trustee who liquidates the assets and distributes the proceeds to the creditors. Chapter 13 bankruptcy is sometimes referred to as the Wage Earner's Plan; this is when the court works out a repayment plan for petitioners who earn a regular income.

Chapter 7

The Bankruptcy Code allows married couples to file individual petitions, to file a joint petition or for one spouse to file for bankruptcy while the other does not. Married couples who file a joint petition are required to individually file the same documents that are required of individual petitioners. Petitioners are required provide the court with a list of their creditors including amounts owed. They must document the amounts and sources of their income. They must provide a list of their assets as well as a detailed list of their regular living expenses. These lists must include information for both spouses, even if only one is filing for bankruptcy.

Chapter 13

Debtors who wish to work out a repayment plan through the courts may file for protection under Chapter 13 of the Bankruptcy Code. Married couples may file a Chapter 13 petition individually, jointly or one may file while the other does not. Both spouses must provide specific information to the court, even if only one spouse is filing for bankruptcy. A Chapter 13 petition must include a list of creditors and amounts owed. Both spouses must document their regular sources of income. Both spouses must provide the court with a list of personal property and a list of regular living expenses.

Considerations

Bankruptcy cases involving only one spouse can be complex and usually require the assistance of a qualified bankruptcy attorney. While the court may discharge the debts of one spouse, debts that are held in common may become the sole responsibility of the non-filing spouse. Married couples in community property states are typically both considered liable for each others debts, even if only one spouse signed for the debt. One spouse filing for bankruptcy will not discharge debts owed by the non-filing spouse.

References

• Administrative Office of the U.S. Courts: Chapter 7
• Administrative Office of the U.S. Courts: Chapter 13
• Lawyers: Bankruptcy FAQ
• Bankrate: When One Spouse Files Bankruptcy; Justin Harelik; March 4, 2007
• Bankrate: Filing Bankruptcy One Spouse at a Time; Justin Harelik; Aug. 28, 2007