I’m Married, Does My Wife Have to File For Bankruptcy With Me?
A short answer regarding the requirements of your partner filing bankruptcy with you is that they do not necessarily have to. If you keep your finances separate, the circumstances suggest that your debts would be a similar situation. For example, newlyweds usually do not have as many joint responsibilities as couples that have spent many years in a marriage. Below are a few common scenarios that may apply to help you decide if you need to file bankruptcy together or alone.
One Partner Has the Majority or All Debts
A business owner or someone just entering a marriage typically carries their own financial obligations. Individual debts carry into the partnership and gradually begin to cause problems with joint finances, even if it falls on one person. If your wife has no significant debt in her name then it’s usually not necessary to endure the consequences of bankruptcy. Keep in mind that this is a two way street meaning that if she is the one with a failed business or an accumulation of significant debt that pre-dates the union, she should file alone.
Preserving the Other Person’s Clean Credit Score
It’s never a smart choice to purposely create a situation that no one in the relationship has good credit. If there is ever a need to start a credit account of any sort, one partner would be able to co-sign or open the account on behalf of the household. The spouse that is left off of the bankruptcy filing does need to be aware that joint accounts that fall into debt can show up on their otherwise healthy report.
The Other Spouse Has All of the Important Assets
When you are forced to forfeit valuable assets during a Chapter 7 bankruptcy declaration, it’s in both of your best interest to ensure they’re protected by exemption. It’s a bit more complex than simply transferring everything into the other person’s name for safe keeping. A lawyer would come in handy deciphering the laws related to valid exemptions and how special rules apply in your situation. If joining in the bankruptcy filing would put you at risk of losing your home, vehicles, or other property then it is probably best to file alone.
Planning for Divorce
If things aren’t working out between you and your partner, it might make the divorce easier if you both get financial relief through a joint bankruptcy filing. This can be pretty complicated without the help of individual lawyers evaluating how beneficial it is for each of you. Chapter 7 would liquidate valuable assets to discharge liability for debts you’ve accumulated together, but never consider Chapter 13 an option because it would force you to work together to complete over the course of years.
Get more information about potentially declaring bankruptcy with your partner by filling out our form to receive an evaluation.