If you and your spouse are deep in debt, what are your bankruptcy options? Do you have to file together, or can one spouse file for bankruptcy without the other?
The truth is, just because you’re married doesn’t mean each spouse is automatically responsible for the other’s debts. But the decision to file bankruptcy jointly or separately will largely depend on several factors — including your current financial situation and future goals.
An experienced Cleveland OH bankruptcy attorney can help you determine which filing option best suits your needs. To learn more, contact Benson Law Firm today.
When Is Filing a Joint Petition a Good Option?
Married couples can choose to file bankruptcy jointly, which is a viable option of you have a lot of jointly-held debt. There are a few advantages to doing this:
- You both benefit from the automatic stay, which puts a stop to all creditor actions.
- Your jointly-held debts will be discharged.
- You only have to pay one filing fee (as opposed to paying for two separate filings).
If you have jointly-held debt and decide to file separately, you run the risk of saddling the non-filing spouse with the liability of any joint debt that the bankruptcy doesn’t discharge. Also, any assets you own could be subject to liquidation in a Chapter 7.
However, filing jointly also means that both you and your spouse will experience a hit to your credit scores. So if you plan to buy a home or apply for a business loan, this is an important factor to keep in mind.
When Is Filing a Separate Petition a Good Option?
If you decide to file separately, only the filing spouse will have their debt discharged through the bankruptcy and enjoy the benefits of the automatic stay. Filing a separate petition may be a good option if:
- Most of the debt is in one spouse’ name, and not jointly-held.
- One spouse owns significant property that you don’t want to lose.
- You don’t want both of your credit scores to be negatively impacted.
Filing separately means that at least the non-filing spouse could maintain a decent credit score. And they may then be in a better position to help the filing spouse rebuild credit by being a co-signee on future loans or credit cards.
Keep in mind that in Chapter 7 bankruptcy, assets are sold to settle creditor debts. So if one spouse has valuable assets in their name and you don’t want to risk having them sold, it’s better for the other spouse to file separately.
Speak to an Experienced Cleveland OH Bankruptcy Attorney Today
So can one spouse file bankruptcy without the other? Yes, but it’s best to weigh your circumstances against your options. To learn more about whether filing separately or jointly makes the most sense for your situation, contact a bankruptcy attorney at Benson Law Firm today.