Can I File a Bankruptcy Claim Without My Spouse?

Marriage often means sharing a home, expenses, property, and financial responsibilities. However, being married does not mean that both spouses must file for bankruptcy if one spouse is experiencing financial difficulties.

Under federal bankruptcy law, a married person may generally file an individual bankruptcy case without their spouse. Whether filing individually or jointly is the better option depends on several factors, including who owes the debts, how property is titled, applicable state exemption laws, household income, and whether the spouses are jointly liable for significant obligations.

Importantly, filing bankruptcy without your spouse does not necessarily mean that your spouse’s finances are irrelevant to your case. Bankruptcy law may require disclosure of information concerning a nonfiling spouse’s income, household expenses, and jointly owned property.

Because the consequences can vary significantly depending on the circumstances, married individuals considering bankruptcy should carefully evaluate both individual and joint filing options before deciding how to proceed.

When Might It Make Sense to File Bankruptcy Individually?

There is no requirement that married couples file bankruptcy together. In some circumstances, filing individually may be the more practical choice.

Examples may include:

• Most of the dischargeable debt belongs to one spouse. If credit cards, personal loans, medical bills, or other unsecured debts are primarily in one spouse’s name, there may be little benefit to placing the other spouse into bankruptcy.
• The nonfiling spouse has little or no debt. A spouse with good credit and few financial obligations may have no reason to become a bankruptcy debtor simply because the other spouse needs bankruptcy relief.
• The spouses maintain substantially separate financial affairs. Although marriage can still affect the bankruptcy analysis, spouses who maintain separate debts and property may determine that only one spouse needs bankruptcy protection.
• One spouse recently received a bankruptcy discharge. Bankruptcy law imposes limitations on how frequently a debtor may receive another discharge. Depending on the timing and chapters involved, one spouse may be eligible for a discharge while the other is not.
• There are strategic reasons for preserving the nonfiling spouse’s credit. When most problematic debt belongs to only one spouse, keeping the other spouse outside bankruptcy may sometimes be advantageous.

These are only examples. Filing individually does not automatically prevent jointly owned assets from becoming relevant to the bankruptcy case, nor does simply placing property in the nonfiling spouse’s name necessarily protect that property.

Property rights are determined in substantial part by applicable state law, while federal bankruptcy law determines what interests become property of the bankruptcy estate and how those interests are treated.

An experienced bankruptcy attorney can evaluate how those rules interact in a particular case.

When Might Filing Bankruptcy Jointly Make More Sense?

Section 302 of the Bankruptcy Code permits spouses to commence a joint bankruptcy case. A joint filing may make sense when both spouses have substantial dischargeable debt or are jointly responsible for significant obligations.

Factors to consider include:

Joint Debts

An individual bankruptcy generally discharges the filing spouse’s personal liability for dischargeable debts. It ordinarily does not eliminate the contractual liability of a nonfiling spouse who is independently responsible for the same debt.

For example, if both spouses signed a personal loan or are jointly liable on a credit card account, one spouse’s Chapter 7 discharge generally does not eliminate the creditor’s right to pursue the nonfiling spouse.

This can be an important reason to consider a joint bankruptcy when both spouses are liable for substantial debts.

Both Spouses Have Significant Debt

If each spouse has substantial credit-card balances, medical bills, personal loans, judgments, or other dischargeable obligations, filing jointly may provide more comprehensive household debt relief than filing separate cases.

A joint case may also avoid the additional filing fees and administrative burden that could result if the second spouse later needs to file a separate bankruptcy case.

Jointly Owned Property

How property is owned can significantly affect bankruptcy planning.

A bankruptcy estate generally includes the debtor’s legal and equitable interests in property when the case is filed. If the debtor owns property jointly with a spouse, the debtor’s interest in that property may become part of the bankruptcy estate even though the other spouse did not file bankruptcy.

However, that does not necessarily mean the property will be lost. Available exemptions, liens, the form of ownership, equity in the property, and applicable state law all affect the analysis.

In Florida, for example, certain property owned by spouses as tenants by the entireties may receive special protection under appropriate circumstances. The availability of that protection is highly fact-specific and should be evaluated by a Florida bankruptcy attorney before filing.

What About Community Property States?

Community property requires special consideration.

States such as Arizona, California, Nevada, and Texas generally recognize forms of community property between married spouses. In those jurisdictions, filing bankruptcy individually does not necessarily mean that only property titled in the filing spouse’s name is relevant to the bankruptcy estate.

Under 11 U.S.C. § 541(a)(2), certain community property interests may become property of the bankruptcy estate even when only one spouse files.

At the same time, the Bankruptcy Code contains special rules concerning the effect of a discharge on certain community property acquired after bankruptcy.

Because community property rules can significantly change the consequences of an individual filing, debtors living in community property jurisdictions should obtain advice specific to their state’s laws.

Does My Spouse’s Income Matter If Only I File Bankruptcy?

Potentially, yes.

One common misconception is that filing individually means the bankruptcy court considers only the filing spouse’s income.

In a consumer bankruptcy case, information concerning a nonfiling spouse’s income may still be relevant. For example, the Bankruptcy Code’s means test may require consideration of household income when determining eligibility for Chapter 7 or calculating disposable income.

This does not necessarily mean every dollar earned by the nonfiling spouse is treated as available to pay the filing spouse’s creditors. Depending upon the circumstances, adjustments may be available for expenses attributable to the nonfiling spouse.

Nevertheless, married debtors should expect to provide information concerning household income and expenses even when only one spouse files.

Will Filing Bankruptcy Affect My Spouse’s Credit?

Generally, a bankruptcy filing should appear on the credit report of the person who filed the bankruptcy—not automatically on the credit report of a spouse who did not file.

However, bankruptcy can still indirectly affect the nonfiling spouse.

For example, joint accounts may be reported differently after one borrower files bankruptcy, and creditors may continue pursuing a nonfiling spouse who remains legally liable for a joint debt.

Married couples should therefore review their credit obligations carefully before deciding whether one or both spouses should file.

What Happens to the Automatic Stay If I File Without My Spouse?

The automatic stay under 11 U.S.C. § 362 generally takes effect when a bankruptcy petition is filed. It prohibits many collection activities against the debtor and property of the bankruptcy estate.

Among other things, depending upon the circumstances, the automatic stay may stop or temporarily prevent:

• Collection lawsuits;
• Wage garnishments;
• Bank-account levies;
• Repossessions;
• Foreclosure activity; and
• Other attempts to collect pre-bankruptcy debts from the debtor.

However, when only one spouse files bankruptcy, the automatic stay generally protects the filing debtor and property of the bankruptcy estate. It does not ordinarily provide the same personal protection to a spouse who did not file.

Accordingly, if both spouses are liable for a debt, a creditor may sometimes continue collection efforts against the nonfiling spouse even though collection against the debtor is stayed.

There is an important distinction in Chapter 13. Section 1301 of the Bankruptcy Code provides a limited co-debtor stay for certain consumer debts. Under appropriate circumstances, this may temporarily prevent a creditor from pursuing a nonfiling spouse who is jointly liable with the Chapter 13 debtor.

The Chapter 13 co-debtor stay has limitations and exceptions and should not be confused with the broader automatic stay protecting the debtor.

What Happens to Joint Debts After Bankruptcy?

A bankruptcy discharge generally eliminates the filing debtor’s personal liability for debts that are legally dischargeable.

It does not ordinarily erase another person’s independent liability.

For example, assume a husband and wife jointly borrowed $20,000 and only the husband files Chapter 7. If the husband’s liability is discharged, the creditor generally can no longer pursue him personally for the discharged debt. However, if the wife did not file bankruptcy and remains contractually liable, the creditor may still have the right to collect from her.

The treatment can be different in certain circumstances, particularly in Chapter 13 and community property jurisdictions.

This is why identifying who actually owes each debt is an important part of determining whether one spouse or both spouses should file.

What About Student Loans?

Student loans deserve separate consideration.

Merely filing bankruptcy—whether individually or jointly—does not ordinarily result in the automatic discharge of most student-loan obligations. Discharging qualifying educational debt generally requires additional proceedings and satisfaction of the applicable legal standard.

Therefore, the existence of student loans alone should not be treated the same way as ordinary credit-card or medical debt when deciding whether spouses should file bankruptcy together.

Should I File Bankruptcy With or Without My Spouse?

There is no universal answer.

For some married couples, an individual bankruptcy can eliminate the financially distressed spouse’s dischargeable debt while allowing the other spouse to remain outside bankruptcy.

For others, a joint bankruptcy provides more complete relief because both spouses have substantial debt or are jointly liable for important obligations.

Before deciding, consider:

• Which spouse is legally responsible for each debt;
• Whether significant debts are joint;
• How real estate and other assets are titled;
• The equity in jointly owned property;
• Available federal or state exemptions;
• Household income and the means test;
• Whether either spouse previously filed bankruptcy;
• Whether the couple lives in a community property state;
• Whether Chapter 7 or Chapter 13 is being considered; and
• The effect that filing individually could have on the nonfiling spouse.

Bankruptcy involves both federal law and state property and exemption laws. Small differences in ownership, liability, income, and filing history can substantially change the result.

For that reason, married individuals experiencing financial difficulties should consider speaking with an experienced bankruptcy attorney before deciding whether to file individually or jointly.

Additional information about the bankruptcy process and filing without an attorney is available from the United States Courts.

If you are considering bankruptcy and would like to better understand whether filing individually or jointly may be appropriate for your circumstances, you can speak with a Florida bankruptcy attorney about your available options.

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