A common myth about bankruptcy is that both spouses within a married couple must file bankruptcy together. While it often is the case that partners will file a joint petition, federal bankruptcy laws don't require that both participate in the same court action.
Depending on the case, married couples can file bankruptcy together or individually.
Married people have a choice of filing separate bankruptcies, or each has the right to file alone without involving their partner. However, if both spouses are responsible for a debt and only one files bankruptcy, the other partner is at risk of being pursued by their creditors for payment. In effect, it will be as if no petition was filed.
There are circumstances in which having one partner file bankruptcy without the other is a good idea. If the couple has been married only a short time and most of the debt relates to one spouse - and was incurred before the marriage - the best move may be for the indebted partner to file alone.
"It's not uncommon for one spouse to have a significant amount of debt in their name only," John Hargrave, a bankruptcy trustee in New Jersey, told Bankrate.com. "However, if spouses have debts they want to discharge that they're both liable for, they should file together. Otherwise, the creditor will simply demand payment for the entire amount from the spouse who didn't file."
The best way for a married couple to determine their course of action is to get a clear picture of whether they can continue to pay their bills.
"The most common sign that you may need a bankruptcy is that you cannot pay your debts as they come due. If you are borrowing on credit cards, using loans to make your monthly payments, or if you are considering a consolidation loan, you may need to consider filing some form of bankruptcy," states Iowa attorney Michael Jankins on the Jankins Law Firm website. "Another common sign is if collection agencies are calling or writing you, or if you are being sued or [have wages] garnished."
Although the most common type of petition filed in U.S. Bankruptcy Court is Chapter 7 Bankruptcy, Jankins recommends that Chapter 13 - which requires a payment plan of the debtors - may be the most effective way for a married couple to save a home that is behind in mortgage payments, a car that is being threatened with repossession or to deal with back taxes owed to the Internal Revenue Service.
More Help on What Happens When One Spouse Files Bankruptcy Without the Other Spouse?
- Chapter 13 Repayment Plan - The Chapter 13 Bankruptcy Repayment Plan can be quite confusing when you are unsure of the details. Here we highlight some of the major questions and topics regarding the Chapter 13 Repayment Plan - read more
- Joint Petition - Joint petitions may be filed by couples who are married on the day they file their bankruptcy petition. A joint petition may not be filed by individuals who are not married, partnerships or corporations. - read more
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