Thinking About Filing Bankruptcy Without Your Spouse? Understand What Can Happen To Joint Debt And Property First


Deciding to file bankruptcy is a big thing for most people. While it would be nice to be relieved of the stress caused by your financial problems, it is going to stay on your credit report and affect your credit worthiness for 7 or 10 years, depending on which chapter you file. If you are married, it is possible for only one of you to file for bankruptcy, keeping the other partner's credit report clean of the filing. However, you need to consider the debt and property you have. If everything is held jointly, the bankruptcy may have a different outcome than what you expected.

Joint Debt

If the majority of the debt you have is in both you and your spouse's name, or it was obtained after you were married, your spouse will still be liable for the debt after it has been discharged in a Chapter 7 bankruptcy.  However, if a Chapter 13 was filed, the creditors of any joint debt cannot go after the non-filing spouse to obtain more money. In other words, in a Chapter 13, both spouses benefit from the repayment plan but in a Chapter 7, the debt is still owed by the non-filing spouse.

Joint Property

In a Chapter 7, unsecured debt can be taken by the bankruptcy trustee and sold to pay a portion of the debt. If you live in a common law state, property that is jointly owned is treated differently. If the bankruptcy trustee can prove that the sale of the property will alleviate a reasonable amount of your debt, it can be sold. However, after the sale, and before any money is taken to pay your debt of legal obligations, your spouse will be paid his or her share of the proceeds.

If you live in a community property state, anything that was purchased after you were married is considered your property, even if only one of you is on the title, deed or ownership papers. So, in a community property state, if you bought a car after you were married, and it is titled and registered in your spouse's name, it is still considered to be your property and therefore a part of the bankruptcy estate. It can be taken and sold if it is worth much more than anything still owed on it. Community property states include:

  • Arizona
  • California
  • Idaho
  • Louisiana
  • Nevada
  • New Mexico
  • Texas
  • Washington
  • Wisconsin

The remaining 41 states are common law states.

When you first talk with a bankruptcy lawyer (such as one found through, take only the information pertaining to you and anything held jointly. If the lawyer needs more information on your spouse, he or she will ask for it and explain why it is needed. Knowing what will happen to joint debt and property is often the key to deciding whether to file with our without your spouse. If at all possible, keep the credit report for one of you clean.


22 April 2015

Staying Strong During A Legal Battle

When you are involved in a messy car accident, things can get complicated fast. In addition to proving who was at fault, you might also have to worry about healing. However, you don't have to endure long phone calls and complicated insurance paperwork on your own. Hiring an attorney is the key to remaining strong during the aftermath of a car accident. As you think about your own situation, try to figure out if you can do things on your own. If you feel like you need a little help, don't be afraid to talk with an attorney. The information on this website should help you to decide how legal counsel can help you.