What Will Happen If Only One Spouse Files for Bankruptcy?

By Cara O'Neill, Attorney
Find out how filing without your spouse might affect your bankruptcy.

It’s perfectly acceptable for one spouse to file for bankruptcy, and in fact, in some cases, doing so makes sense. What will happen, however, depends on the circumstances.

If the married couple lives in the same household, the filing spouse must include the income of the non-filing spouse on the bankruptcy paperwork filed with the court. In a Chapter 7 bankruptcy, the information will determine whether the filing spouse’s income is low enough to pass the means test (the financial qualification test). As a result, a married couple making too much to qualify for Chapter 7 bankruptcy cannot get around the income requirements by filing separately.

If the couple is married, but each spouse lives in a different house (for instance, they might work in separate cities), the filer must include the income of both spouses in the means test calculations. However, because the filer can list the expenses of both households, the filing spouse will likely be in a better position to pass the means test.

If the couple is separated, the non-filing spouse’s income will not be included on the petition. The filing spouse should be prepared to present proof of the separated marital status, however.

It’s important to know that in each of the above scenarios, the non-filing spouse might need to sign a waiver that acknowledges that the filing spouse plans to use the couple’s exemption rights to protect property. (You’re allowed to exempt (keep) a certain amount of assets in bankruptcy.) By signing the waiver, the non-filing spouse agrees that the filing spouse can use the exemption even though it won’t be available if the non-filing spouse needs to file bankruptcy at a later date. (To learn more about protecting property in bankruptcy, read What Can I Keep, If Anything, If I File for Bankruptcy?)

Not only do exemption laws vary from state-to-state, but a failure to understand the law could result in a loss of valuable property or future rights. To prevent an unwelcome surprise, you should seek the advice of a local bankruptcy attorney.

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