April 20, 2014

Can I File Bankruptcy Without Involving My Spouse?

married person can file individual bankruptcyIf you are married, can you file an individual Chapter 7 or Chapter 13 and not include your spouse?

Yes you can.  Regardless of whether you are married or separated, you can file bankruptcy on your own even if  your spouse does not want to cooperate.   Further, you non-filing spouse’s credit will not be damaged by your bankruptcy filing,  unless there are joint debts that end up not getting paid in your case.

If you are married, however, your non-filing spouse’s income and expense information, and possible his/her asset information may be relevant to your case and may have to be revealed.

The bankruptcy law requires us to consider household income, which means that your spouse’s income has to be considered.   The law assumes that two people living together as husband and wife both contribute to the household 1   If, however, you and your spouse have separated out your income and expense obligations, we can make an argument that some or all of your spouse’s income or expenses should not be counted in your case.

While filing jointly with your spouse is not required, it can sometimes make a lot of sense.  I often run “what if” scenarios with potential clients and their skeptical spouses to reveal the benefits and the downsides to a joint filing.

One word of caution – the U.S. Trustee as well as the Chapter 7 and Chapter 13 trustees recognize that some debtors will try to manipulate the system by shifting joint household expenses to the non-filing spouse.  Also, your case is likely to draw a “good faith” objection if your budget includes your spouse’s $900 per month car payment as a separate, non-household expense.   I think that the key concept here is “reasonableness.”   Bankruptcy  is intended to balance the rights of creditors with the rights of debtors and the Bankruptcy Court will balk at attempts to manipulate the system.

That being said, individually filed bankruptcies by married debtors are common and should not present any unusual problems.

  1. By the way, Georgia is not a community property State.  For those of you who live in community property States, the analysis I am describing may not apply.   My Bankruptcy Law Network colleague Cathy Moran writes often about community property issues and bankruptcy on the BLN blog.
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Jonathan Ginsberg practices consumer bankruptcy law in the Atlanta, Georgia area.

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