You may be well aware of the impact bankruptcy will have on you, but how will it affect your spouse? Can one spouse file bankruptcy without the other?
The short answer is yes. But there are some important factors to consider before deciding to file separately or jointly. A Paducah KY bankruptcy attorney can help you understand your options. Contact Farmer & Wright, PLLC today.
Do Married Couples Have to File Bankruptcy Together?
Although you may file taxes together, you do not have to file bankruptcy together. You have the option to file a joint or separate bankruptcy petition, depending on the types of debt you have as well as your goals after bankruptcy.
Bankruptcy Options for Married Couples
What to Know About Filing Jointly
If you and your partner both have significant debt under your names, you may want to consider filing a joint petition. What are the advantages to doing this?
For one, it can be cheaper to file a joint bankruptcy than to file two separate ones. You may save case filing fees as well as legal fees. You will also both benefit from the automatic stay, which will stop or pause any eviction, repossession, or other legal actions against you. Another consideration to make is that if you have a lot of jointly-held debt, and you decide to file alone, your spouse will be saddled with the responsibility of your jointly-held debt.
Of course, if both you and your spouse file together, both of your credit scores will be adversely affected. This could pose a problem if you plan on purchasing a home or taking out a loan in the future.
What to Know About Filing Separately
If only one of you has debt that you need to get rid of or manage through bankruptcy, it’s better for only the in-debt spouse to file a bankruptcy petition. The upside to filing alone, of course, is that the bankruptcy will not show up on your spouse’s credit report and they will be able to continue making payments to creditors as they have in the past.
This way, only the spouse who files bankruptcy will see a negative impact to their credit score. And the non-filing spouse may be in a better position to help the filing spouse rebuild their credit later by being a co-signee for future credit cards or loans.
What Is Part of the Bankruptcy Estate?
When you file bankruptcy, the court will consider your estate to determine if you are able to repay creditors. If your spouse owns property in only their name, but is not filing bankruptcy, the property should not be considered part of the bankruptcy estate. This is important to consider when determining whether you qualify for Chapter 7 or Chapter 13, and what will be liquidated to repay creditors.
Speak to a Paducah KY Bankruptcy Lawyer Today
If you and your spouse are considering bankruptcy, it’s best to speak to an experienced attorney who can help you weigh your options. Because it’s not so much a question of “Can one spouse file bankruptcy?” and more a question of “Should one spouse file bankruptcy?” At Farmer & Wright, PLLC we can help. Contact us today to learn more.