Can I File for Bankruptcy on Myself and Not on My Spouse?
It is always possible to file bankruptcy individually even if you are married. But before deciding whether you and your spouse should file jointly for bankruptcy, it's important to understand your options. The decision will largely be determined by the property laws of your state and the available bankruptcy exemptions.
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Joint Debt
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Just because you are married doesn't mean all the debts of you and your spouse are joint debts. In most states, only the spouse named on the debt is liable for payment. If both spouses are named on the debt, then each spouse is jointly and severally liable. This means that just one spouse filing for bankruptcy will not terminate the liability of the other spouse for joint debt. One spouse discharging his liability for the joint debt in most states will make the other spouse liable for the entirety of the balance.
Community Property
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The rules are different in a community property state. First, all debts assumed by either spouse during the marriage are considered community debts; it doesn't matter whose name is or isn't listed. Second, if one spouse files for bankruptcy and the debt is discharged, neither spouse will have any liability for the debt. Thus, in a community property state it is possible for both spouses to get out from under shared debt with only one spouse filing for bankruptcy. Debts from before the marriage remain individual.
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Exemptions
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Another major consideration is property exemptions. If you or your spouse is filing for Chapter 7, it's likely at least some of your property will be subject to liquidation to help settle your debts. If you file for marriage jointly, the amount of property you can exempt from the bankruptcy sale is higher. The benefit of the higher exemption amount, which lets you keep more of your property, can make it more worthwhile to file Chapter 7 bankruptcy jointly in common law states. Though there are nationwide federal property exemptions, each state can choose to use the federal exemptions or its own.
Adding a Spouse
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Though the forms are similar, there are separate bankruptcy petitions used to file bankruptcy individually or jointly. A bankruptcy judge is not obliged to let you add your spouse later once you've filed, so you should review your situation carefully before filing. If after filing individually you decide you want to add a spouse, you can request the judge allow the filing of a joint petition if you are not too far along in the process, or else it might be necessary to request the case be dismissed so you can start all over.
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