Bankruptcy Law For Married Individuals: What You Need To Know

If you have been considering filing for bankruptcy, it's important to understand how such a decision can affect your financial situation if you are married. In fact, depending on how you approach that bankruptcy filing, it could have lasting consequences for your spouse. It's important that you weigh your options carefully to determine the best path forward for you, your spouse, and your marital property. Here are some of the things that you need to know.

Which Filing Options You Have

One of the first things that you need to understand is that, if you are married, you will have the option to file your bankruptcy individually or as a couple. You'll have to decide if you and your spouse both want to file for bankruptcy or if it's just for one of you.

For example, if you carry a lot of individual debts that don't apply to your spouse, you may decide that it's better for you to file individually. If more of the debts in question are marital debts, it may be in your best interest to file as a couple.

How Bankruptcy Can Affect Your Spouse

If you file for bankruptcy as a couple, the process is pretty standard. You'll both claim marital debts and assets as part of the process. However, if you file for bankruptcy on your own, you'll be required to list all of your debts, including the ones that your spouse is named on as well. Unfortunately, what this means is that, when you obtain your bankruptcy discharge, your spouse will then be solely responsible for those debts. 

However, while you will have bankruptcy on your credit report, your spouse will not. It's important that you watch your spouse's credit carefully to ensure that it doesn't get reported if you file individually. Sometimes, mistakes happen and it's up to you to catch them.

Which Assets Must Be Counted

If you file for bankruptcy individually, you also need to understand what assets may be susceptible to liquidation as part of the process. Even jointly-held assets that aren't subject to the exemptions can be used as part of your bankruptcy filing. However, if there are any assets that your spouse owns individually, those assets are protected. That does not mean that you should transfer jointly-held assets to your spouse, though. Transfers like this shortly before your filing will be identified and can be considered fraudulent.

Talk with a local bankruptcy attorney today for more information.