What Happens When Only One Spouse Files for Bankruptcy? When filing for bankruptcy, you need to decide whether to file an individual or joint case. While filing jointly has some benefits, it also has some major disadvantages. In most cases, filing individually is the best choice. For example, filing jointly does not discharge joint debts. This means that your spouse will still be responsible for any debts that you had before marriage.
Legal Effects When Only One Spouse Files for Bankruptcy
A bankruptcy filing by one spouse will not affect the other spouse’s debts. If the filing spouse has no assets, the other spouse may not want to lose them. If one spouse has a clean credit history, the other may not be affected by the bankruptcy.
In a single spouse’s bankruptcy case, the property of the non-filing spouse will not be part of the bankruptcy estate. This is because property that is not exempt will be sold by the bankruptcy trustee. In a joint bankruptcy, the spouses’ property will be part of the bankruptcy estate.
In some cases, one spouse’s bankruptcy will eliminate their joint debts, but the other spouse’s bankruptcy will not. The creditor will try to collect repayment from the non-filing spouse. In such a case, the spouse should discuss lichidation options with their lawyer.