Should I File for Bankruptcy by Myself, or Should I File with my Spouse?

Many people wonder whether they should file for bankruptcy with their spouses. Spouses who are going through a divorce may be especially reluctant to file together. Whether or not you should file together depends on many circumstances.

THE PROS:

  1. Filing with your spouse doubles the amount of exemptions, or amounts in property you own that you are allowed to keep. For instance, a spouse filing alone will get to keep up to $35,000 in a house. If he or she files with their spouse, that amount will be raised to $70,000.
  2. If only one spouse files for bankruptcy, this may leave the other spouse on the hook for the debt. A spouse’s obligation to pay back a car loan, for instance, may be discharged, but if the nonfiling spouse signed the paperwork for the loan, they will still be obligated to pay the loan back.
  3. A marital settlement agreement, or MSA, is not a protection against creditors. If your spouse agrees during your divorce to pay back a credit card you used together, then fails to do so, the bank does not have to recognize your MSA. The bank was not a part of your agreement with your spouse. Filing for bankruptcy together will protect both of you and erase the debt completely. There are exceptions to this rule, such as a spouse agreeing to pay a debt instead of paying child support, but usually you will have to prove this in court, resulting in more hassles and legal fees.

THE CONS:

  1. If you and your spouse have kept your financial affairs separate, then you may not need to file for bankruptcy together. You can keep your credit record clean.
  2. You may have special personal property or land that you own separately and wish to protect. Keep in mind that, even if you do not file, you will still have to provide information to the Bankruptcy Court about your household income and expenses.

Don’t go into the bankruptcy process alone.  Let a caring, experienced bankruptcy attorney help you.  Call the Law Office of Rebecca Darchuk at (828) 505-1052, or email her at darchuklaw@gmail.com for a free consultation.