Can I file bankruptcy without my spouse?

Yes, you can file bankruptcy without your spouse. A variety of factors play a role in determining whether filing bankruptcy with or without your spouse makes the most sense for you. This article will explore some of these considerations, then provide you with an overview of how to file bankruptcy without your spouse. 

When Does Filing Bankruptcy Without Your Spouse Make Sense

There are times when it makes sense to file bankruptcy without your spouse: 

• the debts are only in your name

• you signed a prenuptial agreement and keep all finances separate

• your spouse may receive an inheritance soon

• your spouse file bankruptcy in the past and isn’t yet eligible for a discharge

• you want to preserve their ability to file bankruptcy in the future, if necessary.

When Doesn’t It Make Sense To File Without Your Spouse? 

It’s rarely clear cut whether it makes sense to file with or without your spouse and in the end it depends on your financial situation and what state you’re filing in. 

Here are a few common reasons folks want to file without their spouse that don’t really hold up when you look at the full picture: 

You don’t want to impact your spouse’s credit (but you have joint debts): Unless they stay current and pay off all joint debt, their credit score will be negatively affected by your bankruptcy. Plus, your bankruptcy discharge won’t protect them from debt collectors.  

You don’t want to include your spouse’s property in the bankruptcy estate (but live in a community state): All your marital assets are part of the bankruptcy estate whether you file together or not. Even if you’re not in a community property state, if you have joint property filing alone may not be enough to protect your spouse’s property interests.

What Is The Effect On The Automatic Stay When Only One Spouse Files? 

The automatic stay protects you from creditors as soon as your bankruptcy case is filed. It stops almost every legal action, including a garnishment, foreclosure, repossession, and any debt collection lawsuit. 

When you file for Chapter 7 bankruptcy, the automatic stay only applies to you. If you file without your spouse, they’re not protected. If you file a Chapter 13 bankruptcy, there is a co-debtor stay, which protects anyone else listed on your debts. 

In a community property state, the automatic stay extends to the community property of married couples. This generally means that the non filing spouse’s wages can’t be garnished for a community debt. 

Is The Non-filing Spouse Protected By The Discharge?

A bankruptcy discharge is the goal of a successful Chapter 7 bankruptcy case. It’s the court order that eliminates your obligation to repay your debts. For any joint debt you have, your spouse won’t be protected by the discharge. Just like any other co-signer, they’re still liable for the debt. 

If you’re in a community property state, the “community discharge” will protect your spouse’s community property. It won’t protect their sole and separate property, though. So, if your spouse has or expects to receive separate property, creditors can try to collect from them. 

How To Fill Out The Forms When Only One Spouse Files

Let’s take a closer look at the individual Chapter 7 bankruptcy forms where you’ll need to disclose certain information about your non-filing spouse. 

Schedule A/B and Schedule C- Assets and Exemptions

Schedule A/B is where you list all of your property, called assets. On Schedule C is where you claim exemptions to protect your assets from the bankruptcy trustee. Some exemption amounts can be doubled when married couples file jointly. If you have property that has non-exempt equity when claiming only your exemption, filing jointly may be the best way to protect it. This is specific to the bankruptcy laws in effect in your state, so be sure to speak to a bankruptcy lawyer about your joint assets and how to best protect them. 

Schedule H - Co-Debtors

This form lists all co-debtors and the joint debts you have with them. If your non-filing spouse is on any of your debts with you, you’ll identify that debt here. If you’re in a community property state (or did at some point in the last 8 years), your non-filing spouse is listed on this form even if you don’t have any joint debt. 

Schedules I and J - Income and Expenses

Your non-filing spouse’s name is necessary on both Schedule I (income) and Schedule J (expenses.) 

The bankruptcy court wants to see total household income, so if you are both living in the same house and sharing income and expenses, that must all be included. List your non-filing spouse’s separate expenses, including their debt repayment obligations, as part of your Schedule J. 

If you don’t live together, you can list your monthly income and expenses separately but any funds your spouse is contributing to your household expenses have to be listed as a contribution.

The Means Test 

The means test determines whether someone is eligible for debt relief under Chapter 7 of the Bankruptcy Code. It’s based on your household income from the 6 months before filing your bankruptcy petition. 

Even if you file without your spouse, you have to include their income in the means test calculation. If they have certain expenses that don’t benefit the household, you can subtract those expenses from their contribution to the household income. 

How To Deal With A Car Loan When Only One Spouse Files

In a Chapter 7 bankruptcy filing there are three ways to deal with car loans: 

• You keep everything basically the same including the car loan and its terms. This is called reaffirming your car loan. The debt is not discharged.

• You borrow money to pay the bank what the car is actually worth and eliminate your responsibility to pay off the rest of the car loan. This is called redeeming your car. 

• You walk away from the debt and surrender the car to the bank. No matter how much you owe on your car loan, it’s eliminated by the bankruptcy discharge. You get to start fresh with a new (to you) car after filing bankruptcy.

If you have a co-signer on your car loan (whether it’s your spouse or someone else), you may be able to keep everything the same without signing a reaffirmation agreement. More on that in this article titled What happens to the co-signer of a car in bankruptcy in 2021?

Let’s Summarize...

It’s absolutely possible to file bankruptcy without your spouse. The better question to ask yourself is whether it makes sense for you to do so in your current financial situation. If you’re not sure, it can’t hurt to schedule a free consultation with a bankruptcy attorney to help you determine the best strategy to protect your family!