Bankruptcy for Married Couples

Bankruptcy for Married Couples

Question: Do I have to file bankruptcy with my spouse or include my spouse’s income, assets, or debt in my bankruptcy if I’m filing without them?

Answer:  You are allowed to file a bankruptcy without your spouse however, because the bankruptcy laws consider the total income of the household, you must still disclose your spouse’s income as well as all assets and debts that are part of the community, and in some situations, the Court or Trustee may have questions about separate assets and debts that are not part of the community between you and your spouse.  Some non-filing spouses have concerns about this. However, you are only being asked to disclose the information, and your individual bankruptcy should not show up as a bankruptcy filed by your non-filing spouse.  If you or your non-filing spouse have questions like this, you should speak to one of our experienced bankruptcy attorneys.  We offer free initial consultation appointments.

Above is a question we are routinely asked.  The short answer is no; you do not have to file a bankruptcy petition with your spouse. You can file by yourself. However, there may be reasons you should consider filing together.  Additionally, even if you file on your own, you will still be required to disclose your marital status, your spouse’s income, and, in most cases, all debts that have been created since you were married.  Please continue reading to learn more about filing considerations for married couples.

Joint or Individual Bankruptcy

If you are married and thinking about bankruptcy, you may file with or without your spouse.  Most times, filing together will protect more assets and discharge more debts.  Filing together can also save money.  However, if you are separated, divorced, or in the process of divorcing, you should ask our lawyers as to which way may be more appropriate.

Louisiana is a Community Property State

If you file bankruptcy by yourself, it may still affect your spouse.  Louisiana is a community property state; unless you have a separation of property agreement, both spouses own most property acquired during the marriage, even if it is only in one spouse’s name.  All community property is part of your bankruptcy, even if you chose to file without your spouse.  Your spouse’s separate property is not part of your bankruptcy.

Who Gets the Benefit in an Individual Case?

Only the person who files the bankruptcy gets a discharge. The non-filing spouse is still liable for his or her separate debts and joint debts. However, the non-filing spouse receives a benefit in community property states when their spouse gets a discharge.  The dischargeable community debts listed in the spouse’s bankruptcy get discharged with respect to community property. What this means for the non-filing spouse is that any community property (including wages) is protected from the discharged creditors (they can only go after the non-filing spouse’s separate property). This benefit lasts as long as both spouses are living and stay married.

Benefits of Filing a Joint Bankruptcy Petition

The three main benefits to filing a joint case are:

  1. Lower Fees and Costs
  2. You can eliminate all dischargeable debts
  3. It saves time and is more efficient

Disadvantages of a Joint Bankruptcy

The three disadvantages of filing a joint case are:

  1. If one spouse owns too much property, it may cause qualification problems or unaffordable payments
  2. If one spouse owes too much priority debt (for example, Tax debt), it can cause unaffordable payments
  3. The effect on your credit will show up on both spouses’ credit reports.

If you or your non-filing spouse have questions about bankruptcy, you should speak to one of our experienced bankruptcy attorneys. We can share more of the benefits of bankruptcy for married couples during a free initial consultation.