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Property And Debt Facts When You File Bankruptcy And Do Not Include Your Spouse

Property And Debt Facts When You File Bankruptcy And Do Not Include Your Spouse

: Richard West Law Office

If you are married and you are considering bankruptcy you have the right to file as an individual rather than filing with your spouse using a joint petition. Just because you have the right to do this does not mean that this is the right solution though, and could have an impact on the outcome of the case and the property and debt that will be protected or eliminated. The effects of filing individually rather than jointly will usually depend on whether you live in a community property state or you reside in a state that follows common law instead.




In all states any property that has been acquired during the time of the marriage is considered community or marital property. This is true whether the state is a common law or community property state. States which follow common law will usually aim for an equitable distribution of the marital assets, but this should not be confused with an equal division of these assets. The label used to describe certain types of property may also differ from one state to the next. This can affect the property that must be listed in your bankruptcy petition, so it is very important that you understand the property labels in the state where you live.




States which follow common law looks at the actual owner of the property, where community property states assume that each spouse owns half of the property regardless of the official owner or title holder. This means that any property only owned by one spouse will not need to be included by the other spouse in a common law state, but in a community property state this property must be included in the bankruptcy petition and case.




The exemptions allowed and the property that can be seized and sold by the bankruptcy trustee can also be different depending on whether you file bankruptcy using an individual petition or a joint petition. Another important consideration is the effect that excluding your spouse from the creditor protections may have. Even if your debts are discharged and eliminated using bankruptcy in many cases the creditors can continue to go after your spouse in order to collect on the debt. Your individual discharge will not protect your spouse, and if the debt is a marital or joint debt then you could still have your household income affected.




Before deciding whether to file bankruptcy alone or with your spouse you should always consult an experienced debt relief attorney and bankruptcy specialist. The lawyer can advise you on the benefits and possible disadvantages of filing both ways, so that you can determine which type of filing will work best in your individual case. Each bankruptcy case is different, and in some cases an individual petition make make more sense but in others a joint petition is the better option.