What You Need To Know About Filing For Bankruptcy Without Your Spouse
Posted on: 20 April 2019
If you're struggling to pay your bills each month or feel like you're making little progress at reducing your total debt, filing for bankruptcy can give you a fresh start. When you're married, you and your spouse can both file for bankruptcy, or you can file for bankruptcy on your own.
Your spouse may be against filing for bankruptcy for multiple reasons, such as concerns that it might interfere with their career or hesitations over how it will affect their credit. Read on to learn everything you need to know about filing for bankruptcy without your spouse.
1. Your Spouse Isn't Automatically on the Hook for Your Debt
A common misconception is that one spouse is automatically legally responsible for their partner's debts; this is not always the case. Whether or not your spouse is responsible for your debt depends on numerous factors.
One detail that determines if your spouse is on the hook for your debt is if the debt is joint or sole debt. If the debt is joint, your spouse will still be legally responsible for the debt, even if you file for bankruptcy. However, if the debt is only in your name, your spouse typically won't be legally liable for it.
There are exceptions if you live in a community property state and the debt benefited you both. Should you reside in a community property state, an experienced bankruptcy attorney can help you determine if this exception applies to you and your spouse.
2. Your Spouse's Credit Won't be Affected If You File for Bankruptcy
If you decide to file for bankruptcy on your own, know that this will not impact your spouse's credit, even if you have joint debts with your spouse. As long as your spouse pays any joint debts on time and according to the terms of the debt agreement, their credit will not suffer.
Though bankruptcy will cause your own credit to suffer, missed and late payments can have a huge impact as well, especially if they're a regular occurrence. Some individuals mistakenly attribute the credit consequences of a late payment to those associated with filing for bankruptcy.
3. The State You Live in Affects the Treatment of Your Spouse's Assets During Bankruptcy
In a non-community property state, assets that your spouse holds only in their name are not subject to liquidation when you file for bankruptcy. Jointly-held assets may be subject to liquidation if the value exceeds your state's permitted asset exemptions.
If you live in a community property state, assets acquired during your marriage are considered equally owned by both spouses. They may be subject to liquidation if the value is more than your state's exemptions. For more information, contact your local bankruptcy attorney services.
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