Filing for Bankruptcy Without Your Spouse

Making the decision to file for bankruptcy isn’t something that is usually taken lightly. For individuals filing alone and have a spouse to consider in the process, it’s even more crucial to get as much information as possible. While bankruptcy is a great debt-relief option, many married couples are concerned about how it will affect the non-filing spouse. Whether you decide to file for bankruptcy jointly or as an individual, here are some things to consider:

What Happens to Property?

Married couples are commonly concerned about how bankruptcy will impact each other’s property, whether owned jointly or individually. Since the state of California is a community property state, filing for bankruptcy could have an effect on your spouse even if you decide to file alone. Having community property means that married couples share ownership of any property and debt obtained during the marriage.

In some cases, filing jointly could allow for more exemptions. However, filing without your spouse may not protect your assets from liquidation unless the assets are NOT community property. Filing alone could limit the number of assets that are protected from liquidation. Since every married couple’s financial situation is different, consulting an experienced bankruptcy attorney can help you decide whether it’s more beneficial to file jointly or alone.

The Impact on Your Spouse’s Credit

Filing for bankruptcy without your spouse is not typically detrimental to your spouse’s credit. Although, if you have joint debt and file for bankruptcy alone, this could impact your spouse’s credit if they are a co-signer on any of your loans or credit cards. Even if the debt is discharged through your personal bankruptcy filing, creditors can still come after your spouse to satisfy the debt. And if your spouse is unable to pay back the debt, then it would be a negative reporting on their credit. If you are eligible, it may be beneficial to consider filing for Chapter 13 bankruptcy. Chapter 13 has a special provision which protects third parties, such as co-signers, from creditors.

What Is Your Best Bankruptcy Option?

Bankruptcy isn’t “one size fits all.” Each couple’s financial situation is different. Depending on the type of debt you want to eliminate and your long-term financial goals, consider the following benefits of Chapter 7 and Chapter 13 bankruptcy.

Chapter 7

  • End harassing phone calls from debt collectors
  • In most cases, you can keep your house and car
  • Most household possessions can be protected
  • Eliminate unsecured debt
  • Get a fresh start in a matter of a few months

Chapter 13

  • End harassing phone calls from creditors
  • Stop home foreclosures
  • Protect certain assets from creditors
  • Protection for third parties (co-signers)

Filing for bankruptcy without an experienced attorney on your side can be a harrowing task. If you and your spouse need guidance, Wadhwani & Shanfeld can help. Contact us today at (800) 996-9932 to learn more about bankruptcy and other debt relief options.

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