Can I file Chapter 13 without my spouse?

You can file for Chapter 13 bankruptcy without your spouse. A Chapter 13 bankruptcy works a little differently if only one spouse files. How certain debts and assets are treated is affected by whether the couple lives in a community property state or a common law state. Whether you’re best served by filing without your spouse or by the two of you filing a joint bankruptcy depends on the specifics of your situation. There are many valid reasons for which a person may want to or need to file for bankruptcy protection without their spouse. Read on to learn about filing Chapter 13 without your spouse.

The Basics of Chapter 13 bankruptcy

Chapter 13 bankruptcy functions as a reorganization of debts and requires a 3 to 5 year repayment plan. The filer must send the monthly plan payment to the bankruptcy trustee, who will then pay allowed creditor claims according to the Chapter 13 plan.

To file Chapter 13 bankruptcy you must have regular income that’s high enough to cover your monthly living expenses and your monthly plan payment. Mortgage arrears, missed car payments, non-dischargeable tax debts, and back spousal or child support payments can be paid off in the plan. It’s possible to pay off debts secured by personal property in the plan, too, such as paying off a car loan. All or a portion of your unsecured debts, including credit card debt, will be paid by your Chapter 13 plan. After all plan payments are made, the bankruptcy court will issue a discharge order erasing any remaining dischargeable debt. 

How Chapter 13 works if only one spouse files

The non-filing spouse’s name and social security number will not appear in the filing spouse’s bankruptcy petition. The non-filing spouse's income must be disclosed in the bankruptcy petition and will be considered when determining Chapter 7 bankruptcy eligibility and included in the means test calculation. The means test determines whether an individual qualifies for Chapter 7 bankruptcy. If a Chapter 13 is filed, because of Chapter 7 ineligibility or for benefits only available in Chapter 13, the means test determines whether the repayment plan will last for 3 or 5 years. Both the means test and Schedule I (income) allow for the marital adjustment deduction for expenses (including debt payments) the non-filing spouse has that don’t benefit the filer’s household. 

The Automatic Stay

The automatic stay protects filers from creditor collection actions while their case is pending. The co-debtor stay protects the non-filing spouse from collections, even if they are jointly liable on the debt. This means that creditors cannot attempt to collect from the non-filing spouse on joint debts. Since payments distributed to creditors by the bankruptcy trustee are not based on the bank’s due dates, the non-filing spouse’s credit will take a hit for joint accounts where the non-filing spouse is a co-debtor. Negative reporting will appear on their credit report and their credit score may decrease even if the joint debt, such as a car loan, is paid off through the Chapter 13 plan. 

The Community Discharge

The community discharge protects the non-filing spouse’s community property from collection once discharge is entered. This applies to joint debts even though only one spouse filed for bankruptcy and received a discharge. Protected community property includes wages, bank accounts, and other personal property. The community discharge doesn’t prevent a creditor from collecting the debt from the non-filing spouse’s separate property, but in practice, this isn’t likely. The creditor would have to expend resources figuring out which, if any, assets are separate property of the non-filing spouse that didn’t receive the bankruptcy discharge.

Tax Refunds

Generally, tax refunds received during your Chapter 13 plan must be handed over to the trustee. This is because all of your disposable income is supposed to go into the plan for the benefit of your creditors. However, joint tax refunds in individual bankruptcy cases are treated differently. The non-filing spouse’s share of the tax refund doesn’t have to be turned over to the trustee as long as you’re not in a community property state. Their share is calculated either as a 50/50 split between the spouses, as a proportionate split based on withholdings during the relevant tax period, or an allocation based on what each spouse’s tax obligations would have been if the spouses had filed separate tax returns. (See In re Lester L. Lee (2014)). In community property states, the full tax refund is part of the bankruptcy estate, even if only one spouse files for bankruptcy. 

Reasons you may want to file without your spouse

There are a variety of reasons why someone may wish to file Chapter 13 bankruptcy without their spouse. Let’s take a look at some of the most common ones.

Related to your debt

You may want to file bankruptcy without your spouse if you recently got married and all of your debt is separate, premarital debt that your spouse isn’t liable to pay or you two have a prenuptial agreement in place and your spouse is not liable on any of your debts. In a community property state, secured and unsecured debts incurred during the marriage by one spouse are considered community debts. This is true even if the other spouse was not a co-signer and didn’t otherwise approve the debt. Community assets can be held liable for repaying the debts taken out by one spouse. When one spouse receives a discharge of debts in an individual bankruptcy case, the community discharge extends to and protects the non-filing spouse’s community property from collection.

Related to their debt

You may need to file Chapter 13 bankruptcy without your spouse if they are ineligible for Chapter 13 because their high debts, such as student loans, push them over the debt limits for Chapter 13. Even if your spouse’s student loan debts are within the debt limits, if those obligations are high it makes more sense for you to file bankruptcy individually so that your spouse can keep making payments on their student loans directly. 

You’ll want to consider filing for Chapter 13 bankruptcy individually if your spouse has high domestic support obligations that are past due and would render the plan not feasible. All past due domestic support obligations have to be paid in full through the plan, which can be impossible if the arrearage is too high. Finally, if your spouse had a prior bankruptcy and is not eligible for a discharge at this time, you may want to file bankruptcy without your spouse. 

Other

You may wish to file Chapter 13 bankruptcy without your spouse if your spouse is a beneficiary in a will and the relative may pass away in the next 5 years. Or, if your spouse works in a profession that requires security clearance or imposes other restrictions on their ability to file bankruptcy, then you may want to file individually. 

One other reason why you may wish to file Chapter 13 bankruptcy without your spouse is to protect the spouse’s nonexempt assets, which are assets that can’t be protected through bankruptcy. Protecting a spouse’s separate, nonexempt property only works if you’re in a community property state and can demonstrate the assets are truly the separate property of the non-filing spouse. 

Conclusion

Filing bankruptcy without your spouse is possible. The income of the non-filing spouse must be disclosed in the bankruptcy petition but their name and social security number will be left out. Your family’s reasons for wanting only one spouse to file for Chapter 13 bankruptcy protection could be compelling. Whether you’re better off filing without your spouse or filing a joint petition depends on your specific situation and it isn’t a bad idea to get a free consultation to discuss all of this with a bankruptcy lawyer.  This is especially true if you think you may end up in a divorce while your Chapter 13 case is pending.

Chapter 13 bankruptcy is very different from Chapter 7. Chapter 13 cases are more complex, last a lot longer, and have more requirements and potential pitfalls. Most people exploring Chapter 13 should speak to a bankruptcy attorney – the failure rate of pro se filers (people who file without an attorney) Chapter 13 cases is very high. 

Upsolve's free web app enables filers to prepare their Chapter 7 bankruptcy forms. If you don’t qualify for Chapter 7, you can typically locate a bankruptcy attorney in your area that provides free bankruptcy consultations so that you can learn more about your debt relief options.