In marriage, many couples share a life that often includes their finances. But if one partner has a large amount of debt, their spouse is not automatically responsible for paying that debt. In fact, there may be circumstances where it makes sense for only one spouse to file for bankruptcy rather than file jointly as a couple.
In this article, we’ll discuss the circumstances where it makes sense to file a bankruptcy claim without your spouse and what effect it will have on the rest of your financial situation.
Cases Where it Makes Sense to File Bankruptcy Individually
There is no requirement to jointly file for bankruptcy with your spouse if you are married. In fact, there are many circumstances where it makes sense to file alone.
Here are some examples:
- If only one spouse has most of the debts in their name
- The other spouse has protected assets or is about to inherit a large sum of money or property
- You have a prenuptial agreement that keeps all of your finances separate
- Your spouse has already filed for bankruptcy and isn’t eligible to file again
Each state treats assets differently, and what is separate property or jointly owned will depend on what state you live in. Navigating bankruptcy law can be confusing at the best of times and even more complicated when there is a complex financial situation. It is crucial to consult with an experienced bankruptcy lawyer who can talk you through all of your options.
Cases Where it Makes Sense to File as a Couple
Marriage is often complicated and sorting through debt and finances as a couple can be equally tricky. Whether your debt involves credit cards, student loans or other loans, you need to consider if you should file the claims together or individually. It is crucial to see which option makes sense long term as a couple.
In many marriages, debts and assets are jointly owned. In this case, they can both be held responsible for the other’s debt. Here are some circumstances where it makes sense to file for bankruptcy with your spouse.
- Joint Debt – Even if you file for bankruptcy, your spouse is still responsible for any debt you hold together, including joint credit cards or medical debt. If you file without your spouse, the creditors can still come after your spouse because they signed the loan agreements.
- Your Spouse Has Fewer Assets – If the non-indebted spouse has fewer assets or the assets are owned jointly with the indebted spouse. In this case, it is a more straightforward transaction to file jointly and could keep creditors from going after the spouse’s assets.
- You Live in A Community State – if you live in a community property state such as Arizona, California, Nevada, or Texas, all of your assets as a couple are part of that bankruptcy. If your spouse owns property or you own it jointly, filing alone may not protect your spouse’s assets.
What Happens When I File For Bankruptcy Without My Spouse?
Bankruptcy law is complicated and can have lasting effects on your personal finances and your spouse’s. It is best to consult with an experienced bankruptcy attorney in your area to figure out the best way to protect yourself. LegalASAP is dedicated to helping consumers find legal help faster and takes out the confusion and stress of sifting through dozens of online search results.
What Is The Effect on the Automatic Stay?
An automatic stay legally protects you from creditors when you file for bankruptcy. This protection stops wage garnishment, repossession, debt collection, and foreclosure for the person who filed for bankruptcy.
How this law applies to bankruptcy cases often varies from state to state. Still, generally, If you file a bankruptcy claim without your spouse, the automatic stay only applies to you, not your partner. Suppose you live in a community property state. In that case, the automatic stay also applies to the couple’s community property.
If you have questions about how to claim bankruptcy or how to file a bankruptcy claim electronically, contact our team of experts at LegalASAP. We can connect you free of charge to our network of legal attorneys. They are experts in their fields and available to help you today with any type of bankruptcy claim and questions.