Should Married Couples File Bankruptcy Jointly?

Posted on: 23 November 2015


Married couples who are in financial distress have the option of filing for bankruptcy jointly or separately. Which option you and your spouse should choose depends largely on your state's laws and your financial situation. To help you and your spouse decide, it is important you know when filing jointly or separately is best. 

Should You File Jointly?

When you file jointly, every asset and debt that you and your spouse have become part of the bankruptcy estate. There are a few advantages to filing jointly, including:

  • Savings on attorney's fees
  • Only have to complete one set of bankruptcy filing forms
  • Savings on bankruptcy filing fees

Where you and your spouse live is important when considering whether or not to file jointly. If you live in a state that allows double exemptions, filing together can be beneficial. The exemption protects assets up to a total dollar value. Those assets cannot be sold by the trustee to pay off your estate. If double exemptions are allowed, you and your spouse could save even more of your assets. 

Filing jointly is also a good option if you live in a community property state. In a community property state, both spouses share the debts and assets that are acquired during the course of the marriage. 

Whether or not both spouses file for bankruptcy is immaterial. In community property states, both spouses are impacted by the decision. By filing jointly, both spouses have more input into what happens during the bankruptcy process. 

Should You File Separately?

There are some situations in which filing separately from your spouse makes sense. For instance, if your spouse previously filed for bankruptcy, filing separately could be best. Bankruptcy laws restrict how quickly your spouse can file again and whether or not he or she is able to file the same type of bankruptcy again.

If your spouse filed a Chapter 7 in the past, it is possible that he or she cannot file for a Chapter 13 now if the time limit has not passed. As a result, if you file jointly, your options for filing could be limited. By contrast, if you file separately, you still retain the option of filing the way that works best for you. 

If you and your spouse were recently married and do not have any assets or debts together, the spouse with the debts should consider filing separately. By doing so, the innocent spouse does not have to take on the financial challenges related to the filing.

A bankruptcy attorney, like Sever Law Office, can help you and your spouse decide what is best for your particular situation.