Thursday, October 6, 2016

What If All My Family's Debts Are In My Spouse's Name, Do I Need To File Bankruptcy Too?

Not all married couples take out debt in the name of both spouses. Sometimes a loan is taken out in only one name because the credit rating of the other spouse is not as robust, or for some other strategic financial planning reason. Whatever your reasons for structuring your family’s debt entirely in your spouse’s name you do need to know how this decision can impact you both if bankruptcy becomes necessary. Both spouses do not have to file a joint bankruptcy case, and making the choice to file as a married person without your spouse also filing can have serious benefits for your spouse.

When only one spouse files bankruptcy some of the following benefits may flow to your spouse who has not filed:

      The non-filing spouse will not have the notation on their credit that a bankruptcy has been filed. This means that if you, as a couple, need to take out a loan down the road it might be easier to obtain an extension of credit if only your spouse makes the application.

      If your spouse can trace monies in a joint account to a source that shows your spouse was solely responsible for a deposit of funds, those funds should be outside the reach of the court as long as the asset was properly classified.

Another situation to think about is the situation where most of the debt is in one person’s name, but there is a small amount held jointly. If this is your situation it is natural that your first instinct might be to file a bankruptcy case without your spouse. But keep in mind that if you make this decision your spouse can be left as the only responsible party for that jointly held debt. This can become problematic if your financial condition does not improve right away and the better decision for most couples is to file a joint bankruptcy case from the outset. If you need help trying to decide what type of case to file when you are married and only one spouse holds the debt (or most of it), call our office.

For more information about bankruptcy cases for married couples, call us today or reach us online at


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