If you’re married and considering bankruptcy, you’ve probably
wondered whether you should file jointly or alone. California is a community
property state, which means filing for bankruptcy can affect your spouse,
even if you file alone. According to community property laws, most couples
share ownership of any property or debts obtained during their marriage.
There are very few exceptions to this rule, even if the item’s title
or deed only lists one spouse.
Will filing for bankruptcy by yourself protect your property and belongings?
Every case is unique. Generally speaking, all community property is included
in bankruptcy. Thus, filing without your spouse may not protect your assets
from liquidation unless they are
not community property. This might include assets such as an inheritance or
recovery from a lawsuit.
In some situations, bankruptcy law allows for certain exemptions. Bankruptcy
laws are designed to give debtors a fresh start, not destroy their futures.
In other words, you may be able to retain certain assets. These are called
“exemptions,” and filing with or without your spouse can influence
the amount of exemptions you get when you file.
In some cases, filing jointly allows you to claim more exemptions, whereas
filing alone can limit the number of assets immune to liquidation.
Which debts will bankruptcy eliminate?
Only the spouse who files for bankruptcy gets his / her debts discharged.
If you file alone, your spouse is still liable for both joint and separate debts.
However, any debts that fall into the “community property”
category are safe from creditors, because the property is still owned
by the non-filing spouse. In bankruptcy law, this is sometimes called
a “phantom discharge” and only lasts as long as the couple
Looking for more information about bankruptcy and married couples? Contact
our team of bankruptcy attorneys in Sherman Oaks to schedule a consultation!