If you and your spouse both have a lot of debt under both of your names, you may want to consider filing a joint petition.
What are the Benefits?
First, it can be less expensive to file a joint bankruptcy than to file two separate ones. In fact, you may save court filing fees as well as legal fees. You will also both benefit from the automatic stay, which will stop or pause any eviction, repossession, bank levy, wage garnishment or other legal actions against you. Another consideration to make is that if you have a lot of jointly-held debt, and you decide to file alone, there is a possibility that your spouse may be saddled with the responsibility of your jointly-held debt.
Of course, if both you and your spouse file together, both of your credit scores will go down in the short term. This could pose a problem if you plan on purchasing a home or taking out a loan in the near future.
What You Should Know About Filing Separately
If only one of you has debt that you need to get rid of or manage through bankruptcy, it’s better for only the in-debt spouse to file bankruptcy. The benefit to filing alone, of course, is that the bankruptcy will not show up on your spouse’s credit report and they will be able to continue making payments to creditors as they have in the past.
Only the spouse who files bankruptcy will see a negative impact to their credit score.The non-filing spouse may be in a better position to help the filing spouse rebuild their credit later by being a co-signee for future credit cards or loans.
What Is Part of the Bankruptcy Estate?
When you file bankruptcy, the court will consider your estate to determine if you are able to repay creditors. If your spouse owns property in only their name, but is not filing bankruptcy, the property will probably not be considered part of the bankruptcy estate; however, it is best to consult with an experienced bankruptcy attorney to evaluate your situation. This is important to consider when determining whether you qualify for Chapter 7 or Chapter 13, and what will be liquidated to repay creditors.
Speak to a Pasadena CA Bankruptcy Lawyer Today
If you and your spouse are considering bankruptcy, it’s best to speak to an experienced attorney who can help you weigh your options. Because it’s not so much a question of “Can one spouse file bankruptcy?” and more a question of “Should one spouse file bankruptcy?” At the Law Office of Daniela Romero, we can help. Contact us today to learn more.