Can I file bankruptcy without my spouse?
I am often asked by one spouse if the other spouse can be “left out” of the bankruptcy filing.
People ask this for a variety of reasons. It could be that one spouse’s name is on most of the debt, and the other spouse wants to preserve his or her credit score. It could be that one spouse is having a tough time convincing the other spouse to file bankruptcy.
The short answer is, yes, it is possible to file bankruptcy without your spouse being part of the filing. But there are some important caveats.
Are you married, separated, or divorced?
Regardless of whether you file a Chapter 7 or 13, your marital status affects your bankruptcy petition in at least two ways. First it determines whether your spouse’s income is factored into your means test calculation–which ultimately either qualifies you to file a Chapter 7, or forces you into filing a Chapter 13.
Second, it determines whether your spouses income and expenses will be counted as part of your household income and expenses–and therefore drives how much “disposable” income might be available to your creditors in a Chapter 13.
Both Husband’s and wife’s income count in a Chapter 7 means test–even if only one spouse files. This reality eliminates Chapter 7 as a possibility for some filers. Don’t necessarily give up if you’ve looked at your household income as compared the state’s allowed limit and found that your over income. Talk to your attorney before you rule out the possibility a Chapter 7, but know that a high household income may push you into a Chapter 13.
The non-filing spouse will not appear in court, or sign papers, but the filing spouse will prove how much the family makes–most likely by using paystubs from the past several months.
Most people are concerned about the affect on the non-filing spouse’s credit report and records. Since the non-filing spouse name isn’t on the petition, he or she will be unaffected by filing, and will be able to continue relationships with creditors as usual.
In Chapter 13, the monthly contribution of the non-filing spouse to the filing spouse’s disposable income will determine how much will be paid to creditors. The filing spouse needs to have “regular” income–regular doesn’t necessarily mean that the spouse is working. Regular income can be money received from the non-filing spouse as part of a monthly allowance, alimony, inheritance, etc.
Like in a Chapter 7, the non-filing spouse will be unaffected by filing and will be able to continue relationships with creditors as usual.
But note, in both Chapter 7 and 13, if you and your spouse are “authorized users” of credit cards, there is an important step you should take to manage the non-filing spouse’s credit report post discharge. Talk to your attorney about what you need to do before you file.
What about separation and divorce?
If you’re separated, your spouse’s income and expenses may be omitted from your petition, but watch out. You will need advice from a competent bankruptcy attorney to ensure that you are not setting yourself up for disaster with the court.
If you are divorced, you do not count your spouse’s income as part of your household income in the means test. But alimony, child support do count as part of your household income.
Domestic partners have another set of issues and the income and expenses of the non-filing partner will also affect the petition of the partner who files. In this case, it really pays to consult with an attorney who will explain what you must count, and what you can omit.
Finally, you should know that if you file together you pay the same court filing fee you would if you file together. Beyond the discussion of whether you can do it “alone,” talk to your attorney about the pros and cons regarding whether you should file together or apart.
Call me, Attorney Shannon D. McDuffie to learn more. (404) 418-8879