If you are married, one spouse can file bankruptcy individually. This will leave the other spouse out of the bankruptcy, entirely. This post details this option, and when this option may prove more appropriate than filing bankruptcy jointly, as a married couple.
Oregon is a separate property state (with a few exceptions) when it comes to a person’s debt. If a husband incurs credit card debt in his name only, his wife will not be liable for this debt. Therefore, sometimes it makes sense to file bankruptcy for only one person in the marriage instead of both people. This is particularly true if the husband or wife came into the marriage with substantial debt and needs to file bankruptcy, but does not want to pull the other spouse into his or her bankruptcy; or, if one spouse incurs substantial debt during the marriage (such as a failed business, etc.), while the other spouse is relatively debt free, and so on.
Married couples can file a joint bankruptcy together, two individual bankruptcies separately, or one spouse can file bankruptcy and the other spouse does not file bankruptcy.
I generally charge the same amount for individual bankruptcy as I do for a joint bankruptcy (which includes both husband and wife). I even had one case where a couple who were engaged to get married, moved their marriage date up so that they could file bankruptcy and only pay for one bankruptcy (as a joint married couple) rather than paying for two separate bankruptcies.
Now, there are also some credit reporting concerns clients raise regarding only one spouse filing bankruptcy: How will if affect the non-filing spouse? Usually the bankruptcy filing of one spouse does not affect the non-bankruptcy filing spouse’s credit, except if there is joint debt involved. For example, if a husband and a wife are jointly liable for a debt and the husband files bankruptcy, the non-bankruptcy filing wife will still be liable for this debt, and her credit report may even show that the co-borrower (husband) filed for bankruptcy on this debt.
Despite only one spouse filing bankruptcy, the other spouse’s income must be calculated in the bankruptcy’s “means test.” This simply means that wage information will have to be provided from the non-filing spouse to determine if the spouse filing bankruptcy is eligible for a chapter 7 bankruptcy. The non-filing spouse’s name will not appear in any of the documents, only a number representing his or her income.
If you have concerns about filing bankruptcy and how it may affect a spouse who does not want to (or does not need to) file bankruptcy, please call today to schedule a free bankruptcy consultation.