If so, what is the negative effect on the spouse? What if they’re both on the debt? What if they’re both on title to a house and on the mortgage?
Yes, each individual can file bankruptcy (like taxes- wife, husband, or joint)
Any joint debt becomes the responsibility of the non-filing partner. If a husband files, all joint debt becomes the responsibility of the wife. (Similar to how co-signers work)
Filing alone leave the spouse(non-bankrupt) still liable for his/her share of joint debts
If both on debt: only one spouse (the one who has filed) will be discharged while the other will still be liable for the debt
In CA and NV- whether a married person files alone or with their spouse all community property is considered to be part of the bankruptcy estate, which is liquidated by the bankruptcy trustee to pay creditors before a bankruptcy discharge can be granted
Common law states: only property that is held jointly can be liquidated to pay creditors, if the non-filing spouse holds individual assets he/she does not need to worry about losing anything
Filing for bankruptcy is a difficult decision to make, especially for married couples. A common question raised in this situation is whether a person can file for bankruptcy individually and if that decision will negatively impact their spouse.
Fortunately, there are no laws that require spouses to file for bankruptcy together. A married couple can choose to file an individual bankruptcy or a joint bankruptcy just as they would when debating to file for joint or individual tax statements. In California and Nevada, bankruptcy law dictates that whether a married person files alone or with their spouse, all community property is considered to be a part of the bankruptcy estate. The community property will be liquidated by the bankruptcy trustee to pay creditors before a bankruptcy discharge can be granted. In common law states, only property that is held jointly can be liquidated to pay creditors. If the non-filing spouse holds individual assets, he/she will not have to worry about losing anything during this period.
Filing for individual bankruptcy will have no negative impact upon an individual’s spouse. The bankruptcy case will not show up on their spouse’s credit report, hurt their chances of obtaining a loan in the future, or force them to explain what has happened to their employer. Keep in mind though, that filing for bankruptcy alone can leave the spouse (who is not filing for bankruptcy) still liable for his/her share of the joint debts. Any joint debt will become the responsibility of the non-filing partner. For example, if a husband files for bankruptcy, the joint debt will become the responsibility of the wife. Likewise, if a husband is discharged, his wife will still be liable for the debt. The spouse will be negatively affected if a loan is unpaid after a chapter 7 or chapter 13 has been filed.
Bankruptcy attorney Pomona can offer you best legal services to satisfy your needs. To clear the doubts regarding your bankruptcy filing, you can make a free consultation with our bankruptcy lawyer Pomona.
Nancy Shevell is an expert article writer for bankruptcy and immigration related topics. if you want to file bankruptcy, make a free consultation and talk with our bankruptcy attorney riverside.