Can I File Bankruptcy Without My Spouse?
Yes, you can file bankruptcy without your spouse. When deciding whether to file bankruptcy with or without your spouse, there are a few factors to consider. We’re here to help you sort through the decision-making process and make the best choice for you and your family. Click HERE to request a free consultation, or call 704.749.7747 to speak with an attorney.
Examining Your Joint Debt Before Filing
The primary purpose of filing bankruptcy is to free yourself from debt. Bankruptcy is typically referred to as a Fresh Start. Because of the powerful relief offered by a bankruptcy filing, you truly do get a fresh start after your case closes. For this reason, our first priority with clients is to make sure we are discharging as much debt as possible in bankrutpcy. Quite often, this analysis will answer the question whether to file bankruptcy with or without your spouse.
For a household that has $100,000 in credit card debt, a Chapter 7 or Chapter 13 filing will provide much needed relief. If half of that debt is joint debt between you and your spouse, the bankruptcy filing would only provide your household with half of the available relief, which we see as a bad result.
Can I File Bankruptcy Without My Spouse If We Have Joint Debt?
If you and your spouse are both debtors on a credit card debt with a balance of $10,000, your bankruptcy filing will relieve you of your obligation to repay that debt; however, if your spouse does not join in the filing or file her own bankruptcy, she will still be liable for the entire $10,000 balance on the debt. As a result, unless there is a pressing reason to not file a joint bankruptcy, we strongly encourage it.
Preserving The Credit Score Of One Spouse
One strategy for not filing a joint bankruptcy is that you want to preserve the credit score of one spouse, for future purchases and credit. While this may have some appeal, more often than not it is misguided. Unless clients are planning on purchasing a new home shortly after the bankruptcy filing of one spouse, preserving your credit score is usually a high price to pay for continuing to carry burdensome debt as a married couple. We have written extensively about how your credit score will recover after bankruptcy, and the news is good. In fact, our favorite bankruptcy clients are those individuals and couples who have already purchased a home and have working vehicles—they can wait the year or two after bankruptcy for their credit scores to recover, before entering into large credit transactions.
Household Income In A Bankruptcy Filing
There may be instances where one spouse makes more income than the other. In these situations, you may think the spouse with lower income can file bankruptcy despite the income of their spouse. For better or worse, the bankruptcy court looks at the income of the entire household when determining whether you pass The Means Test in bankruptcy. As a result, both your income and your spouse’s income will need to be considered when determining whether you qualify to file Chapter 7. Additionally, if you’re considering Chapter 13 filing, your household income will be a factor in determining your Chapter 13 payment.
Fortunately, if one spouse is filing and the other is not, there is an opportunity to take what is known as a Marital Adjustment when calculating household income. In this instance, we are able to exclude any household income which the non-filing spouse is spending on him or herself. This includes, but is not limited to: hobbies, health insurance, food, vehicle, etc. When these expenses are carefully investigated, quite often they make the difference for passing The Means Test.
Joint Mortgages In Bankruptcy
Filing a bankruptcy without your spouse will not affect a joint mortgage negatively. In a Chapter 7 filing, you will need to be current on the mortgage when filing, or make a decision to surrender the property to the bankruptcy court. In Chapter 13, one spouse can use the bankrutpcy filing to get ‘caught up’ on the mortgage; in the meantime, so long as the Chapter 13 payments are consistently made, the non-filing spouse will be protected from the mortgage creditor, the same as the spouse who filed the bankruptcy.
Speak With A Charlotte Bankruptcy Lawyer Today
If you are considering filing bankruptcy, it’s important that you speak with a Charlotte bankruptcy attorney. The call is free and you will come away with a much better understanding of your options. You can reach us at 704.749.7747 or click to request a FREE CASE EVALUATION, and we will be in touch shortly.
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