If you’re married, you’re probably wondering how bankruptcy will affect your spouse. That’s a genuine concern many married people share when they consider whether to file as individuals or together as a couple.
Bankruptcy can provide essential debt relief, but it comes at a cost. Part of that cost is an immediate hit to one’s credit score. The bankruptcy will also show up on their credit report for up to 10 years, and they must wait several years to file for bankruptcy debt relief again.
These are some of the broad strokes to consider, but there are many other ways bankruptcy can impact your life. So, it’s only natural to wonder how it can impact your spouse’s life as well.
The truth is that bankruptcy will impact your spouse in one way or another whether you file as an individual or together. That said, you can limit the extent of its impact by carefully weighing the possible consequences of your decision.
Can One Person in a Marriage File as an Individual?
You can file for bankruptcy without your spouse, and it might even be a good idea when you have a lot of separate debt. This is debt you incurred before you got married, such as medical debt or an old credit card balance, and it’s the debt that only you are responsible to pay.
When you file for bankruptcy as an individual, you can seek a discharge for your separate debt and your responsibility for debt you share with your spouse.
Any discharge you get, however, will only apply to you. This means your spouse will become solely liable for what was shared (marital) debt. That’s why filing as an individual makes the most sense for most people when only one spouse has significant separate debt to eliminate.
Another consideration is property liquidation. Your spouse’s separate property can’t be liquidated, but anything you own separately or jointly with them can be. So, it’s important to carefully consider what belongs to you, your spouse, and both of you jointly.
Means testing to qualify for Chapter 7 can also be problematic for a married person attempting to file as an individual. This is because both their income and their spouse’s income are taken into account. If the total income is above the threshold to qualify for bankruptcy, filing for Chapter 7 may not be an option.
Will Filing as an Individual Affect My Spouse’s Credit?
In most cases, filing for bankruptcy as an individual won’t have an adverse income on the other spouse’s credit score. It also won’t show up on their credit report.
It’s for these reasons that filing for bankruptcy as an individual can be a smart financial move: It allows a couple to eject one spouse’s burdensome separate debt while continuing to benefit from the other’s good credit.
Should I File for Bankruptcy Before Getting Married?
Generally speaking, it’s a good idea to seek debt relief before getting married. This can prevent one spouse’s overwhelming debt from adversely affecting the other’s otherwise healthy financial situation.
It can also preclude many of the concerns that married couples have about filing for bankruptcy, such as deciding whether a joint or individual filing is more advantageous.
We Can Assist with Bankruptcy Matters
When you are considering bankruptcy, it helps to have a guide who can guide you through the process.
The Law Office of Steven J. Hart has more than 20 years of experience helping people navigate bankruptcy. By giving them the information they need to make the best decisions for themselves, we empower our clients to take control of their financial lives.
Learn more about how the Law Office of Steven J. Hart can help during a personal consultation. Contact us today to get started.