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Bankruptcy for married couples

Debt is not something confined to individuals, because economic decisions made by one person can affect both parties of a marriage. Indeed both parties can incur debt collectively. If you are married and you find yourself in a situation where you need to declare bankruptcy, you will have to ask yourself if you should file individually (and you spouse does not), jointly as a couple, or both of you individually.

It is certainly possible for a married person to file bankruptcy indivicually, but you should ask yourself if it’s a good decision. If a married couple has a lot of joint debt–i.e. loans for which they both signed–filing jointly would probably be a better decision. Even if they don’t have much joint debt, sometimes the non-filing spouse has a significant amount of debt. If this is the case, the filer may not get all the benefits of the bankruptcy. Remember that the court will still consider the non-filer’s income as part of “household income” to determine whether the filer qualifies for a Chapter 7, or a Chapter 13 bankruptcy (an attorney will be able to counsel you on the details).

Advantages to filing jointly include the ability claim exemption according to state law or federal law, which permit the protection of certain properties from creditors. Additionally, when filing jointly, both spouses receive an automatic stay and thus remain immune to collection actions. Finally, in practical terms, a couple filing jointly can gather the necessary paperwork and documents as a team. Don’t underestimate the amount of time it takes to do this. And it doesn’t hurt that there is only one filing fee.

Also you should note that some couples may want to file for joint bankruptcy, but mitigating factors may prevent it. Sometimes one party does not want to file for bankruptcy. Sometimes one spouse is not permitted to file for bankruptcy, for instance if they have committed fraud by incurring debt with the intent to declare bankruptcy. And there may be more complicated cases in which one party has too much debt for a Chapter 13, whereas the other does not.

As a matter of course, you should consult an experienced bankruptcy attorney before making any decisions.