January 9, 2017
A common question when considering bankruptcy is, “How will filing a bankruptcy affect my spouse?” In many cases it might be in your best interest that only one spouse file a bankruptcy. In other cases, it may benefit both spouses to file. It often depends on the nature of your debt and property ownership.
When you file a Bankruptcy proceeding, you are required to list all the assets you own and every debt you have. If you have unsecured credit cards, medical bills, or lines of credit that are issued in both yours and your spouse’s name, it might make sense to consider a joint case, in which you both file a bankruptcy proceeding. If only one of you files when debt is shared, the creditor can just pursue the other party for the debt.
However, if only one spouse is obligated on a debt such as a vehicle or a mortgage, and you intend to retain the asset and make payments, then it may not make sense for a non-filing spouse to file a bankruptcy proceeding.
Another common question is “My spouse does not intend to file, why do I have to provide their income as part of the process and to the bankruptcy Trustee?” The Bankruptcy Code requires a non-filing spouse to provide the last 6 months of income prior to the filing spouse’s bankruptcy filing date. This is required because the bankruptcy code requires disclosure of the household’s total income for the 6 months prior to filing as part of the review process. If a non-filing spouse has their own bills, such as credit card, medical, vehicle or mortgage debts to pay, those are all taken into consideration in a household budget.
When considering bankruptcy it is important to understand the obligations and options for both you and your spouse. Part of the job of your bankruptcy attorney is to review all of your options and the options for the non-filing spouse to provide you with the best advice for the fresh start you are seeking.