Filing Bankruptcy Individually or Jointly

You've determined that filing for bankruptcy is the only way for you to get out from under your massive debt. Your spouse remains hesitant. You're thinking about going it alone. The general rule of thumb is for you and your spouse to jointly file for bankruptcy. But, there are valid reasons for not filing a joint case.

You and your spouse have mounting debt. A part of the debt is yours, some belongs to your spouse, but most of it is joint debt where both of you are responsible for paying it off. You've told your spouse that you want to file for bankruptcy, but she isn't sure that bankruptcy is the right way to go. In making the decision of whether or not you should file for bankruptcy, you also need to weigh the advantages and disadvantages of filing by yourself or filing together.

Advantages of a Joint Bankruptcy

It is usually preferable for both spouses to file for a joint bankruptcy for the following reasons:

Bankruptcy costs. The costs that debtors have to pay for a bankruptcy are about the same for a joint case as they are for an individual case. If your spouse files at a later time, you will be paying the costs for two cases.

Joint debts. If your spouse does not join in your bankruptcy and you and your spouse share responsibility for payments on the same debts, your spouse will remain liable for the joint debt and may continue to be pursued by creditors.

Efficiency. The amount of work performed in filing joint schedules, statements and other documents in a bankruptcy case will be reduced if you and your spouse file a joint bankruptcy.

Reasons for Not Filing a Joint Case

There are several valid reasons for not filing for joint bankruptcy. One obvious reason is that your spouse does not want to participate in a bankruptcy. But, there are a few situations when a joint bankruptcy may be a bad idea or just isn't available:

• Your spouse is barred from filing because of a prior bankruptcy
• You and your spouse jointly own property that is in excess of federal exemption levels and is protected from creditors by broader exemptions under state law.
• If you are pursuing a Chapter 7 bankruptcy, your spouse is barred from filing by some likely objection to discharge
• If you are pursing a Chapter 13 bankruptcy, your spouse has a large priority debt, has debt above the Chapter 13 debt limits or has some other debt problem that makes a joint bankruptcy impossible
• In some community property states, it is not necessary for the other spouse to join in the bankruptcy because nearly all community debts and community property will be affected by the individual spouse's bankruptcy.

Joint Filing Not Guaranteed

The filing of a joint bankruptcy petition does not always guarantee that your and your spouse's separate estates (individual assets and liabilities) will be automatically consolidated. This is particularly true if one spouse has more nonexempt property than the other spouse and some or all of the debts are not joint debts. The reason is because the creditors of the spouse with more nonexempt property will not want to share those assets with the creditors of the spouse with less nonexempt property.

To determine if you and your spouse should file for joint bankruptcy, it is strongly suggested that you seek the counsel of a bankruptcy lawyer.

Questions for Your Attorney

• What are the advantages of filing a joint bankruptcy petition with my spouse?
• In what circumstances is joint bankruptcy not available?
• Does the filing of a joint bankruptcy petition guarantee that my and my spouse's separate estates will be consolidated?

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