3 Questions To Ask Before Filing Individual Bankruptcy During Marriage

1 March 2016
 Categories: , Blog


If you're married and either you or your spouse is considering filing independently for bankruptcy, you're likely concerned about how this will affect your lives. Before making any big decisions, it's important to consider some important questions, such as the three outlined below.

1. Do I Live in a Community Property or Common Law Property State?

The answer to this question will determine what will happen to the property you've acquired during your marriage, either separately or jointly.

For example, in a community property state, any money that was earned and things that were bought during the marriage will be jointly owned by both parties. This means that if you file bankruptcy, even things that your spouse purchased for themselves with their own money can be collected by creditors to recoup their losses. In a common law property state, however, anything that you own jointly with your spouse will be split in half, and anything that your spouse owns themselves will not be considered as yours.

2. How Will My Spouse Be Affected By My Filing?  

The answer to this question will depend on whether you live in a community property or common law property state, as well as whether you qualify for any exemptions.

If you own a home together in a common law state, for example, you own half of the home and your spouse owns half. If that property is not exempt, then that property can be sold. Your spouse, however, will be paid their portion of the property. If you're in a community property state, however, your spouse will receive no reimbursement for any jointly owned property.

In a common law property state, only your debts will be discharged (meaning your spouse is still responsible for their share of joint debts) while in community property states, your spouse won't be held responsible for any jointly-held debts as long as you're living and remain married.  

3. How Will This Affect Our Future Goals?

Before filing bankruptcy, it's important to sit down with your spouse and consider how this filing will affect you and your spouse's future goals.

For example, if you hope to buy a home in the near future, consider whether your spouse would be able to qualify for a mortgage loan on their own, as bankruptcy can make qualifying difficult. If not, then you'll likely have to put off buying a home for a few more years. A bankruptcy attorney can help you to decide whether filing is right for you, and if you do choose to file, whether chapter 7 or chapter 13 would be best for your future goals.

To learn more about filing for bankruptcy while married, consult with a bankruptcy attorney today.