Marriage And Bankruptcy: What You Need To Know

One of the biggest issues that come between married couples is finances. One spouse may be more financially conservative while the other spends freely and takes on debt. Perhaps both of you have let your finances get out of control. No matter the issue, it is important to get your financial house clean to avoid future conflicts. One way to do this is to file for bankruptcy. If you are married, there are some considerations to think about if you want to file for bankruptcy:

Do Both of You Need to File for Bankruptcy?

The rules on this topic vary among states. In most cases, married couples do not have to file a joint bankruptcy. Any person who has significant assets they do not want to risk does not have to file for bankruptcy even if their spouse intends to do so.

What Income Is Used During a Bankruptcy?

If you are married but only one person files for bankruptcy, the court still considers the entire household income and the home's expenses. This is true even when your spouse is not listed on the bankruptcy. The point of considering all the income and expenses is to have a correct filing. The trustees will look through all the debt in the filing to make sure the person who is responsible for the debt matches the name on the bankruptcy.

For example, if your spouse purchased a boat using your credit card, your spouse has to take the responsibility for the debt even if the debt is in your name. The process of bankruptcy and sorting out the debt is complex. It is crucial that you have all your debt information as you go into bankruptcy to ensure all your debts are included even if they are your spouse's name.

Can You Each File Bankruptcy Separately?

If you are a couple who keeps their finances separate, you may have thought about filing your own individual bankruptcies. You can do this, but you have to keep some things in mind. If you co-signed on a loan for your spouse, only one of you can add the debt to the bankruptcy even though you are both responsible for it. When the bulk of the debt happened during your marriage, it is easier to file together if at all possible.

If you are thinking about filing for bankruptcy, call a local bankruptcy attorney to get started. This is a long process but can be difficult and long. However, the result will be worth the peace of mind.