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Filing for Bankruptcy as an Individual While Married

September 15, 2021
Bankruptcy While Married

If you’re like many people contemplating filing for bankruptcy, you probably have a range of questions and concerns. If you’re married, one of your primary concerns is perhaps how filing for bankruptcy may affect your spouse, such as whether you are required to report your spouse’s income during the filing process. Here’s what you need to know about filing for bankruptcy as an individual while you’re married.

Married Couples Can File Separately or Jointly

California bankruptcy law allows married couples to file a bankruptcy case separately or together. However, because California is a community property state, your spouse’s income and assets must be provided on the bankruptcy petition. They will be taken into consideration when the court determines your ability to pay off your debts.

This may leave you wondering why even bother to file bankruptcy as an individual if the spousal income is considered part of the picture, but there are several good reasons for this.

Advantages of Filing as an Individual

When a couple files a joint bankruptcy petition, both of their credit scores will be negatively impacted once the bankruptcy has finished finalizing. Suppose one spouse remains with a reasonably good credit rating. In that case, that person can still enjoy the benefits of having good credit, such as getting approved for significant purchases at an attractive interest rate.

Filing as an individual makes sense when one party has significantly more personal debt than the other. Fortunately, new spouses aren’t responsible for debts incurred by their partners before the marriage. Nonetheless, it is often a good idea for those contemplating bankruptcy to get it out of the way before getting married.

What About Joint Debts?

Joints debts are where the situation becomes tricky. If one party files for bankruptcy over jointly accrued debts, the non-filing partner is nonetheless responsible for those debts even if the party who filed has been granted a discharge. For this reason, experts recommend that married couples file a joint bankruptcy petition if significant joint holdings are part of the picture.

As you can see, there is no one-size-fits-all solution to this, which is why it’s essential to obtain expert legal counsel before proceeding with filing a bankruptcy petition.

Contact SM Law Group

Don’t hesitate to call SM Law Group today for more information on filing for bankruptcy either jointly or singly and for advice on which approach is best for your particular situation. We have offices in both Los Angelis and Riverside and will be happy to schedule a free consultation for you.



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