Can I file bankruptcy without my spouse?
Filing bankruptcy separately doesn't halt financial ties in a marriage.
Legally, married people who are in debt are allowed to file bankruptcy without their spouse, but that doesn't mean they aren't tied together financially in the view of the U.S. Bankruptcy Court.
"For various reasons, often just one spouse files. When this happens the question arises: what impact does the non-filing spouse's income have on the bankruptcy," writes Boston attorney Nicholas Ortiz on BankruptcyLawNetwork.com.
The biggest effect of the bankruptcy on the non-filing spouse is the amount of their income that is contributed to the "means test," which is a measure of the debtor's income, expenses and how they compare to the average income in their state.
The non-filing spouse's income is considered in the means test, but only to the extent that it contributes regularly to household expenses of the debtor or the debtor's dependents. Income that is used solely by the non-filing spouse isn't considered, according to Ortiz.
Under the bankruptcy code, that is called the "marital adjustment."
In an example of a husband who filed bankruptcy, but his wife did not, Minnesota attorney Craid Andresen writes on the website: "Income received by the wife which is spent on groceries eaten by the husband is 'income,' but income earned by the wife which is spent on her student loan payments is not [his] 'income.'"
One important factor in such "divided" cases is whether the debtor is filing bankruptcy in a community property state where all the assets acquired and all the debts incurred during marriage must be equally shared.
That means a creditor is able to collect on a debt by tapping both separate assets and community-owned assets of the couple. As a result, there are different advantages to filing alone or with a spouse.
News Orleans attorney Kevin Gipson writes on BankruptcyLawNetwork.com that the biggest advantage may be that some states provide a larger exemption on the family home for married couples than for someone filing bankruptcy alone. A dual filing also covers all assets by both spouses and protects them from creditors.
However, he also points out advantages of filing individually - both spouses are given an automatic stay on creditors' collection proceedings, including car repossessions and home foreclosures. The discharge of debts also applies to both spouses, and if non-filing spouses need to file bankruptcy at a later time, they don't have to wait the full eight years to file another Chapter 7 bankruptcy.
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