Struggling with loads of debts you cannot repay can make life stressful and overwhelming, and you might consider turning to bankruptcy in this case. If you want to file bankruptcy and are married, you could file with your spouse or without. Before you choose which way to file, talk to a lawyer to find out the specifics about each option.
Why Married People File Individually
There are times when married couples do not file for bankruptcy together. Instead, one spouse files and the other does not. When this happens, it is often for one of the following reasons:
- One spouse wants to protect his or her credit.
- One spouse is responsible for all the debts.
- It is more beneficial for the couple to have just one spouse file instead of both.
Filing individually is often more beneficial; however, it depends on the exact situation, including the debts the couple has, their assets, and the reason for filing. The only way to determine which way is best for you is by talking to a bankruptcy lawyer about it.
How Exemption Laws Affect Individual Filings
A second thing people consider when determining whether to file individually or jointly involves the exemption laws in their state. The two main types of states include common law states and community property states. Tennessee is a common law state.
In common law states, a married couple's assets and debts are not necessarily jointly owned. Instead, spouses may own their own assets and have their own debts. The difference with community property states is that the law views a married couple's assets and debts jointly owned. This makes a huge difference in bankruptcy cases when spouses file individually.
How Bankruptcy Handles Debts and Assets
If you decide to file for Chapter 7 bankruptcy individually when married, you can file a discharge of debts for all debts you owe. In other words, your bankruptcy can include all debts with your name on them.
If you have joint debts, the bankruptcy will discharge the debts for you; however, the case does not discharge them from your spouse. This means your creditors can come after your spouse for the debts even if you file. If the debts are only in your name, the creditors cannot come after your spouse for payment of them.
If all the debts you have are in both of your names, you filing alone will not offer relief to you, simply because your spouse will still have to pay all the debts. Filing individually is best in situations where one spouse owes debts in just his or her name alone. Because of this, you should never file without fully examining your situation with an experienced attorney.
With Chapter 7, assets work the same way. The court can seize assets you own in just your name, but they cannot seize assets in your spouse's name alone. The court might also have rights to jointly owned assets, but they can typically only seize your portion of the jointly owned assets.
Filing individually will protect your spouse's credit unless you have joint debts that your spouse does not pay off after you file. Chapter 7 will affect your credit. The court places the filing on your credit report, and it will remain there for 10 years from the date of discharge.
If you cannot pay your bills and would like to find out if bankruptcy could help you regain control, contact Terry E. Hurst, Attorney at Law. We offer bankruptcy assistance and can help you learn more information about bankruptcy and the alternative options you have to choose from.