If you are thinking of filing for bankruptcy, you might wonder whether your spouse also needs to file and what impact it could have on their finances.
Being married does not mean you must file together, and there are several situations where you or your spouse might want to file independently. If you have separately owned assets, individual debts, or a prenuptial agreement, filing alone might make sense.
Regardless of your motivations, make sure you understand these key considerations to make the right choice for you and your family.
1. Property and assets
Depending on your bankruptcy, a court-appointed trustee might liquidate your assets to help pay off debtors. In most states, any property owned by your non-filing spouse remains in their possession. Your trustee can use shared assets to satisfy debts, but your spouse should receive compensation for their portion.
2. Spousal income
Even if your spouse does not file, their income helps determine which type of bankruptcy you qualify for and might impact how much you have to repay. Means testing uses your income and assets to calculate whether you can pay off your debts.
3. Debt obligations
When filing for bankruptcy, your outstanding debts are either paid off or discharged. Your spouse retains responsibility for their debt obligations, including any debt they shared or co-signed with you.
Filing for bankruptcy is a difficult decision, and when you have a spouse to consider, it can be even more challenging. Whether you want to protect your spouse’s assets or credit, it helps to understand how your bankruptcy filing can affect them.