Can a Married Person File an Individual Bankruptcy Petition?

           A married person is certainly permitted to file an individual bankruptcy just as he or she would be permitted to file an individual income tax return.  However, this does not always mean that it is a good idea to leave your spouse out of the filing.  Only a bankruptcy attorney who has met with you and understands your financial situation can recommend an individual versus joint filing. Many people that I met with at Halcomb Singler, LLP, are interested in filing an individual bankruptcy without their spouse because they accumulated the debt prior to the marriage, because the debts are primarily in one of the spouse's name or because they want to preserve the creditor of one of the spouses.

         While there can be many reasons that just one spouse would file a bankruptcy, there are also many considerations to take into account prior to ruling out a joint bankruptcy filing.  First, if both spouses have accumulated a significant amount of debt it may make sense to file jointly.  There is no reason to file individually if, after the debt of the filing spouse was discharged in bankruptcy, that the couple would still not be able to afford a minimal standard of living and the ability to meet their debt payments.  In that case it would likely make more sense for the married couple to file a joint bankruptcy because the couple would be no better off after one spouse filed a bankruptcy.  In addition, attorneys fees charged by many bankruptcy attorneys are not based on whether the bankruptcy is joint or individual, so the couple may pay the same amount of attorneys fees for an individual bankruptcy as a joint bankruptcy filing.

         As I indicated previously, if there is a mountain of debt in one of the spouse's name, but the other spouse has very minimal debt it can be a good idea for the debt-ridden spouse to file for an individual bankruptcy.  One misconception that some folks have is that if his or her spouse files for bankruptcy that the bankruptcy filing will show up on his or her credit report.  This is not true.  In order for a bankruptcy to show up on your credit report you must actually file for bankruptcy.  The major benefit of filing an individual bankruptcy is that the non-filing spouse's credit will not be harmed by the bankruptcy filing of his or her wife or husband.  However, it is important to note that if both spouses are liable for a debt that the non-filing spouse will still be responsible for the debt even though his or spouse has discharged it in bankruptcy.

        It is also important to acknowledge that even if a spouse does not file bankruptcy and even though the bankruptcy will not appear on the non-filing spouse's credit report that a non-filing spouse can be indirectly affected by the filing of their spouse's bankruptcy.  The income and expenses of the non-filing spouse are taken into consideration in the preparation of the bankruptcy petition and if the filing spouse files a Chapter 13 bankruptcy it is not likely that the Chapter 13 will be successful without the support of the non-filing spouse.  If you are interested in how a non-filing spouse can be affected by the bankruptcy, read my previous blog entry on bankruptcy and the non-filing spouse.

         Whether the debt is in the name of one spouse or both spouses, it can certainly add a lot of additional stress to a marriage.  I encourage couples to speak openly about their finances and debt issues.  Debt is best dealt with when couples form a plan of attack together.  Without a plan the debt can often drive a wedge between couples and may even be the primary cause of a divorce.  If you and your spouse are living in central Indiana, have issues with debt and you would like to meet with me to discuss you plan of attack contact me at 317-575-8222 or click here.  Bankruptcy is not the only option we can discuss and the initial consultation is free.

Halcomb Singler, LLP, is a debt relief agency.  It helps people file for bankruptcy under the bankruptcy code.  No attorney-client relationship with the firm of Halcomb Singler, LLP, is created through this blog. Also, please note that Erika Singler is an attorney licensed in Indiana and does not seek to practice law in any jurisdiction in which they are not properly authorized to do so.  The information contained in this blog is general in nature and should not be relied upon for the circumstances of any individual(s) or businesses.