Can I file for Bankruptcy without my Spouse?

Many individuals are concerned that filing for bankruptcy without their spouse could affect their spouse’s credit score or finances and the property they share, and ultimately end their marriage. This post is to address some questions for people who are considering filing for bankruptcy without their spouse.

Can I file for Bankruptcy in Florida without my Spouse?

There are instances where one person carries more debt than their spouse, be it from medical bills or credit cards, and ponder, “Can I file for bankruptcy in Florida without my spouse?” In some instances, these debts were taken out prior to getting married, or simply only one spouse signed the credit card agreement or note. Luckily there are circumstances that allow only a single spouse to qualify for bankruptcy. Many people worry that filing bankruptcy without their spouse will cause their spouse financial harm.

So, can one person file for bankruptcy without their spouse? The quick answer is yes, but the issue is more complex than most may think. Various circumstances determine whether filing bankruptcy individually is even a possible option for some people or even be worthwhile. Here is a partial list of factors:  

• Does the filer and the non-filing spouse own any property together?
• What laws does your state of residence have regarding shared property?
• Do you live in a Community Property State or Common Law State;
• Do you have any mutual debts with your spouse, or did your spouse sign a personal guarantee, or are the debts only incurred by you?
• Do you plan to file a Chapter 7 bankruptcy or Chapter 13 bankruptcy?

Can I File for Bankruptcy if I Share Debts With My Spouse?

Joint debts are one factor that impacts the ability of a single spouse to file for bankruptcy. If there are shared debts, it may be best to file bankruptcy as a married couple (a same-sex married couple may also file bankruptcy). If only one spouse files for bankruptcy when there are joint debts, the bankruptcy discharge may impact your spouse financially. Additionally, your spouse will still be liable for the shared debts that are discharged in the one spouse’s bankruptcy. Meaning, creditors may still pursue your spouse to collect these debts.

Does My Bankruptcy Impact My Spouse’s Credit?

Generally, one spouse’s bankruptcy filing does not affect the credit score of their non-filing spouse. 

Common Law Property States

Florida and other states which apply common law principles to property ownership mean that the person on title to a property owns the property. If the property is owned jointly, each spouse typically owns half unless indicated otherwise.

The bankruptcy discharge for the filing spouse will eliminate their obligations to pay their separate debts and debts shared with their non-filing spouse. The discharge will not affect the non-filing spouses’ responsibility in regards to any shared debts. In other words, your spouse will still be responsible for paying back their separate debts and remains obligated for any shared debts.

Community Property States

In states that have community property laws, unless indicated otherwise, all property obtained while married is owned equally by both spouses, regardless if only one spouse is on the title.

Just like common law property states, the filing spouse’s debts get a bankruptcy discharge, and the non-filing spouse remains liable for their separate debts and shared debts. However, in a community property state, the non-filing spouse gets an added benefit. All the dischargeable community debts get discharged in connection to community property. This takes all the community property, which is owned by the filing non-spouse, out of the discharged creditor’s reach. This is often referred to as a phantom discharge, which continues during the lives of both spouses who remain married.

Will my Spouse’s Property be Included in my Bankruptcy?

Pursuant to 11 U.S.C. § 541, when a bankruptcy petition is filed with the bankruptcy court, a bankruptcy estate is created. The laws of each individual state determine the extent of a debtor’s interests in the property itself.

Common Law Property State

The non-filing spouse’s separate property and their portion of any joint property with the filing spouse will not be included in the bankruptcy. It is important to note that for any nonexempt joint property, a chapter 7 trustee can sell the entire asset to get the filing spouse’s portion and pay the non-filing spouse their portion. The chapter 7 trustee may also attempt to partition the property and only sell the filing spouse’s share.

Community Law Property State

All community property becomes part of the filing spouse’s bankruptcy estate regardless if the other spouse is part of the Filing. This means more property is in jeopardy when only one spouse files in a community property state than in a common law property state. Prior to Filing, the filing spouse should verify that there are enough exemptions to protect all of the community property (property acquired while married). Most states, when both spouses file bankruptcy, permit the exemption amounts to be doubled. Therefore, if the filing spouse is unable to exempt all community property, it may be in the married couple’s best interest to file jointly in order to double the amount of the exemptions to protect more property.

Special Consideration for Tenancy by the Entirety States

Certain states, such as Florida, allows married couples to own property as tenants by the entirety – as a single marital entity. Tenancies by the entirety property may be exempt in bankruptcy where there are joint debts and only one spouse files. However, if both spouses file for bankruptcy, the entireties exemption will not protect the property from creditors or the Trustee.

Contact a Miami Lakes Bankruptcy Lawyer to Discuss Filing without your spouse.

If you have additional questions regarding filing bankruptcy without your spouse or you are simply not sure if bankruptcy is right for you, please contact our Miami  Lakes Bankruptcy Lawyer for a free consultation at (305) 515-5928.