A common question when a married couple considers bankruptcy is whether to include both spouses in the bankruptcy petition. A bankruptcy can be filed by only one spouse, but whether you should file individually depends on several factors. A bankruptcy filing may not give the non-filing spouse the full protection of the automatic stay or the bankruptcy discharge. Below are some factors to consider.
- Community property state? Idaho is a community property state. Generally, assets and debts acquired during marriage are part of the community property, and will be part of the bankruptcy estate even if one spouse files separately.
- Recently married? If you are recently married, and one spouse has separate liabilities pre-dating the marriage, it might be advantageous for the spouse with the debts to file bankruptcy separately.
- Married, but separated? If you can’t get the cooperation of your spouse, you may need to file separate. However, this could put the non-filing spouse at risk. If you own property jointly, a joint filing may be advantageous.
- Generally, marriage alone does not make both spouses liable. Contracts such as home loans or credit cards may be separate liabilities. This will depend on state law where you are filing, and whether the debt was incurred before marriage.
It is generally advantageous for both spouses to jointly file a bankruptcy petition. However, the parties should analyze the facts and circumstances of each case in order to determine the best filing status.
About the Author:
Mike Hall is an attorney at the Idaho Business Law Group, PLLC, located in Meridian, Idaho. You can find him at idahobusinesslawgroup.com, email at mike@idahoblg.com.
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Thanks for the information..We are in the middle of a chapter 7 bankruptcy n are 5 months behind on the house payments. The house place wants a relief from the stay or all of the money from where we are behind in. Can we go to a chapter 13 bankruptcy now in order to save the house n can we do it on only the mortgage company?See credit counseling for bankruptcy what are your views?
ReplyDeleteBankruptcy is really a curse. I can remember when I was 10 my father worked very hard to tackle the bankruptcy situation. I never wanna fall such situation.
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