It is very common for spouses to have debts separate of each other – either debts from before the marriage, or debts that build up on your independent credit. Even after being married, the credit of each spouse will be measured individually if the debts are just in one person’s name. An example is a credit card with one spouse’s name on it, but not the others. In that case, the debts and payments there only appear on one spouse’s credit report.
Filing Bankruptcy Separately While Married
If you are considering bankruptcy because of debts that are in your name only, you may be able to file bankruptcy without your spouse. If that is the case, your bankruptcy may not have an impact on your spouse’s debts or credit score. In that situation, your bankruptcy would be like a normal individual Chapter 7 or Chapter 13 bankruptcy. You should speak to your attorney about what impacts you will see as a couple in the future. If you are planning to apply for a loan as a couple, the credit score of one spouse will affect your joint credit health.
One important way in which your spouse can impact your individual bankruptcy filing is in your eligibility for Chapter 7. In order to qualify to file Chapter 7 Bankruptcy, you will need to undergo a Means Test. Part of this test is measuring your household income against the average income for households in your state. If you are unable to pay off your debts, but your spouse has a significant income, you may not qualify to file Chapter 7. In this situation, you may still qualify to file for Chapter 13 Bankruptcy as a individual.
Filing Bankruptcy Jointly
If the debts that you need to discharge are joint debts held by both you and your spouse, you may want to consider filing bankruptcy jointly as a couple. There are actually some advantages to this – you can combine some of the work in terms of collecting documents, and you may be able to pay some fees once (instead of twice if you both needed to file individually). Of course a joint bankruptcy will impact both of your credit scores, but if you are being crushed by joint debt, bankruptcy may be the right course for you.
Other than combining some work and fees, a joint bankruptcy is very similar to a individual bankruptcy. Your attorney will be able to walk you through the differences so you can decide which path is right for you.