Do Married Couples Have to File for Joint Bankruptcy?

marriage finances

Married couples can either file for joint bankruptcy, or one spouse may file for individual bankruptcy without involving their spouse.

The decision to file jointly or not typically comes down to evaluating how much debt and property the couple shares as well as how much debt and property belongs to each separately. Typically, the goal is to discharge as much debt as possible while simultaneously protecting as much property as possible with bankruptcy exemptions.

Depending on the configuration of the aforementioned factors, it may or may not make sense to file for joint bankruptcy with your spouse.

Are You Burdened by Marital Debt or Separate Debt?

One of the first considerations you should take into account is the type of debt you want to discharge with bankruptcy.

If you and your spouse share a lot of marital debt, then filing a joint bankruptcy could make a lot of sense. Not only can you and your spouse get rid of debt you accrued during marriage, but you can both eject dischargeable debts you may have brought into your marriage.

If a married couple has a lot of joint debt and only one spouse files for bankruptcy as an individual, they may receive a discharge. Their spouse, however, will remain on the hook for the joint debt and any separate debts that still belong to the marriage.

Because of this, it can make much more sense to file for individual bankruptcy when one spouse has a lot of separate debt to discharge and little to no joint debt belonging to the marriage.

How Much Property Do You Own?

Another factor to take into account is the value of assets belonging to the marriage and each spouse separately. Separate property is any property a spouse had before getting married, and may include things such as a savings account, real estate, etc.; therefore, marital property is any asset obtained by either spouse during marriage and belongs to both spouses equally.

This is where it can get tricky when figuring out whether filing for joint bankruptcy is more or less advantageous than individual bankruptcy.

On one hand, spouses who file jointly can double the exemptions they’re allowed to claim during bankruptcy; on the other, their combined assets and separate property may be subject to liquidation in Chapter 7.

If a spouse has a considerable amount of separate property exceeding the value of what claiming double exemptions may protect (or non-exempt separate property one does not wish to lose), then it might make sense for the other spouse to file individual bankruptcy; even so, this might not be the best option when there is a lot of joint debt to discharge.

Contact a Bankruptcy Lawyer for Legal Assistance

As you can see, there is already a lot to consider when determining if filing for joint or individual bankruptcy is right for you. You don’t have to file for joint bankruptcy with your spouse, but it may be advantageous to do so. We’ve only scratched the surface here, so speaking with an experienced bankruptcy lawyer about your unique situation is the best way to move forward.

If you’re looking for a bankruptcy attorney who can provide you with experienced guidance, contact us at Buchalter & Pelphrey Attorneys At Law today. 

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