Can I Avoid Bankruptcy If My Spouse Wants to File?

In a marriage, spouses often share bank accounts and manage finances jointly. As a result, when one spouse begins considering bankruptcy, the plan to file often includes both spouses. When both spouses in a marriage want to file for personal bankruptcy, the US Bankruptcy Code allows them to file a joint petition. In a joint petition, all of the parties’ assets and debts are combined into one bankruptcy case, and there is only a need to pay the fees associated with one bankruptcy and the couple only must go through a single bankruptcy process. However, in some circumstances, one spouse might want to file for bankruptcy while the other spouse does not want to be involved in the bankruptcy case.

Can one spouse in a marriage avoid bankruptcy while the other spouse files individually? This practice is more common than many people might think, and it is possible for just one spouse to file a consumer bankruptcy case. Consider the following information from our West Palm Beach bankruptcy attorneys.

Bankruptcy Cases Can be Filed by One Spouse in a Marriage

As we mentioned above, bankruptcy law allows just one spouse in a marriage to file for bankruptcy. When this happens, any jointly owned assets or debts will still be considered in the bankruptcy case, but only the filing spouse’s portion or interest in those assets or debts will become part of the bankruptcy case.

Impact on Joint Assets and Accounts

When just one spouse plans to file for bankruptcy, it might ultimately make more sense for both spouses to file a joint petition if the majority of assets and debts are joint ones. In other words, if most of the filing spouse’s assets include joint bank accounts, real property, and personal property, and most of the filing spouse’s debts include credit card debt on accounts jointly held by the spouses, a joint bankruptcy petition will likely make the most sense. If the filing spouse’s interest in or portion of the assets and debts are of a nature that filing for bankruptcy is a logical decision, the other spouse may want to reconsider and become part of a joint petition.

Yet if the filing spouse’s primary assets and debts are separate property, with only limited joint property, the filing spouse’s interest in joint property can be determined and accounted for in the bankruptcy case.

Common Circumstances Where One Spouse Files for Bankruptcy 

Some of the most common circumstances in which one spouse files for bankruptcy and the other does not include, for example:

• Filing spouse accrued a significant amount of debt — such as credit card debt or student loan debt — prior to the marriage;
• Filing spouse’s debt is primarily medical debt due to an emergency or unexpected health event; or
• Spouses are separated (and planning on divorce).

Contact a West Palm Beach Bankruptcy Attorney Today 

There are many different reasons that just one spouse will want to file for personal bankruptcy and the other spouse will not want to file for bankruptcy. As we noted above, it is possible for one spouse to file for bankruptcy while the other does not. To learn more about how this might work for you and your spouse, it is important to seek legal advice. One of the experienced West Palm Beach bankruptcy lawyers at Kelley, Fulton, Kaplan & Eller can talk with you today about individual and joint bankruptcy filings in marriages. Contact our firm to learn more about how we can assist with your individual or joint bankruptcy filing options, or to begin working on your bankruptcy case.

Source:

uscode.house.gov/view.xhtml?edition=prelim&path=/prelim@title11