The decision to file for bankruptcy is a personal one. Married couples are faced with the extra step of deciding whether to file together or not, which will alter the course of the proceedings and how debt is collected. While laws vary by state, here’s a general guide how your case will be affected whether you file jointly or separately.

What to Consider When Filing For Bankruptcy as a Couple

Debt Discharge

When a married couple files for bankruptcy together, they can discharge all of their joint debt. This includes mortgages, credit cards, car loans, and other financial obligations in both of their names.

Fees & Paperwork

By filing together, married couples can also reduce the amount of fees they pay. Since one petition is being submitted to the court, the couple is paying one fee instead of two. They also have less paperwork to complete and attend the same court dates.

Property Collection

After a joint filing, creditors are required to stop contacting a married couple about any joint financial obligations due. Home foreclosures, wage garnishment, and other previous collection efforts in both people’s names are also put on hold. This hold will remain while the case is evaluated, but assets may eventually be seized to pay for the debts.

By filing individually, you protect all of the property and assets owned by the non-filing spouse in case the state tries to seize them. However, this doesn’t apply to community property states, including Louisiana, Arizona, California, Texas, Washington, Idaho, Nevada, New Mexico, and Wisconsin, which may still take these for payment.  However any obligations in their joint names or in the non-filing spouse’s name will remain.

Credit History

Bankruptcy brings down the credit score of the filer, but when only one spouse files, it keeps the other’s credit intact as long. The proceedings won’t affect their credit standing and if future loans are necessary, the couple can rely on the non-filing spouse’s financial history as long as that spouse can stay current on their obligations. 

For bankruptcy advice and debt relief, call Nancy V. Jacob in Cincinnati, OH. Since 1989, her law office has provided counsel in financial matters and assisted clients with paperwork to help give them a fresh start during a difficult time. Visit her website to learn more about your options when dealing with financial hardship, or call (513) 921-1400 to schedule a free initial consultation.