What is the difference between a joint filing or a separate filing for Bankruptcy?
If you are married, you have the option to file bankruptcy jointly with your spouse. This means that in one file you will both eliminate your debt. However, just because you are married, that does not mean you need to file together.
For example, say only one spouse works and holds all the debt, maybe just that spouse will choose to file. This is because the other spouse wouldn’t really see a benefit from bankruptcy. As another example, say both spouses have debt, but one spouse has a large amount, and the other has very little debt. In both of these examples, one spouse filing is okay. There is nothing in the bankruptcy code that says you have to file a joint bankruptcy.
Only the debts of the person who files the bankruptcy get discharged in the bankruptcy. Thus, it’s best to find out who owes the loans. A good attorney can help find out who owes which loans and credit cards. Whether a loan or credit card is joint or not also appears on the credit report. In Minnesota, there are two types of debts that spouses automatically owe jointly.
- Medical bills. According to the “doctrine of the necessities” both spouses are automatically on the hook for the medical bills of each other and children.
- Tax debts when you filed a joint tax return. If your tax returns show that you owe taxes, and you filed the taxes together, then both spouses owe the taxes.
When is it a good idea to file jointly?
If you have gathered jointly liable debt it would make sense for both to file. This is because you will still be liable on the debt, even if your spouse files bankruptcy. Also, you and your spouse can file separate bankruptcies if needed. For example, say one of you doesn’t qualify to file a chapter 7, but the other does. Maybe one party files a chapter 7 and the other party files a chapter 13.
On the other hand, say you are married, but separated and are thinking of filing a joint bankruptcy. Generally, as long as both parties can cooperate during the bankruptcy, and are still married, they can file a joint bankruptcy. You don’t even have to live with your spouse to file a joint bankruptcy.
Does Anything Bad Happen To The Spouse Who Doesn’t File?
No, nothing bad happens to the spouse that didn’t join the bankruptcy. This person is called the “non-filing spouse.” The bankruptcy is not on their credit report, their credit score does not suffer, and the court does not do anything to that person. They also need not attend the bankruptcy hearing.
If there are joint debts and the non-filing spouse didn’t join the case, then the non-filing spouse still owes these joint debts and they will appear normally on credit reports. For example, if both spouses are joint on a mortgage, but only one spouse files bankruptcy, the mortgage will still appear normally on the other spouse’s credit report and they can interact with it normally.
The court will ask the attorney to get the non-filing spouse’s pay stubs to show that the person filing bankruptcy isn’t married to a millionaire, but the non-filing spouse’s name doesn’t show up on the paperwork at all. The attorney makes a budget for the household to show the court why the bankruptcy makes sense.
Whether you should file a joint bankruptcy or not is an excellent question any of our attorneys would love to explore with you in a free consultation. You can set up a free consultation with this link: https://calendly.com/d/d4z-39b-mvc
