San Diego Bankruptcy Lawyer| If I am married and living together, do I have to file for bankruptcy jointly with my spouse?

The simplistic answer to the question of whether you have to file bankruptcy jointly when you are married is no.  You can choose to bankruptcy individually.  However, whether or not this is the best decision depends on a number of factors and often involves detailed legal and factual analysis tailored to the individual situation.
First off, my discussion of this topic is limited strictly to California bankruptcy filings.  California is a community property state with unique exemption laws.  My analysis would not necessarily be appropriate in states that have different property and exemption laws.
Whether you decide to file bankruptcy with your spouse or not will depend on a number of factors as follows:
1)      were the debts incurred jointly;
2)      does one of the spouses have separate vs. community property;
3)      are there issues because one spouse is ineligible for a bankruptcy discharge;
4)      is an objective of the bankruptcy junior lien avoidance on a jointly owned property;
5)      is it possible for one spouse to preserve a good credit rating;
6)      particularly with regard to Chapter 13 bankruptcy are the spouses amicable with one another;
7)      must one spouse maintain a security clearance;
8)      Will an exemption waiver create a problem;
9)      and what are the attributes and characteristics of each spouses obligations and liabilities
Let me start by saying that when you are married and you file for bankruptcy without your spouse your spouse will still be involved in the process to some extent.  If you are living with a non-filing spouse their income is still considered in the means test determination for the filing spouse.  For Chapter 7 the non-filing spouse’s income is generally combined with the filing spouse to arrive at current monthly income.  If the combined income exceeds the median income for your household size, and you and your spouse don’t have the right mix of necessary expenses, you may not qualify for Chapter 7 bankruptcy.  In a Chapter 13 bankruptcy your ability to repay is based on your household budget.  So even if only one spouse files for bankruptcy, the other spouse’s income and expenses are considered in determining the repayment obligation of the spouse who has filed for bankruptcy.  In addition the filing spouses exemption choices are limited if the non-filing spouse does not file an exemption wavier.  For the issues involving spousal waivers and how they may affect  a non-filing spouse see my blog post on this issue.
The benefit of having one spouse filing without the other may come from the fact that the non-filing spouse can preserve their credit (assuming that it is not already shot) and even make credit purchases for the household solely in their name that might not otherwise be possible.  In addition the non-filing spouse may in the future have their own individual need to file for bankruptcy and unavoidable future debts from an illness or loss of a job.  If they are not a party to the bankruptcy all of their separate bankruptcy options are kept open.
On the other hand if the debts are incurred jointly the creditors may go after the non-filing spouse for the balances that were discharged by the bankruptcy.  With that said, the creditors remedies may be limited to levy against the non-filing spouses separate property with the analysis of that issue being outside the scope of this discussion.  Even so, the debt collectors can continue to call to demand money from the non-filing spouse for the joint debt or his or her separate debts.  This in itself can be quite disconcerting for a couple looking for a fresh start.  I also will leave for a future discussion the situation where the spouses are living apart.  This creates a whole variety of unique issues and problems. Even with this situation, under the right conditions and careful consideration a joint bankruptcy might be possible and advisable.  I touch on some of these issues in my blog article about spousal waivers.
In the end careful legal analysis tailored to the facts and an individual couple’s needs and objectives is required.  You should discuss with qualified counsel your objectives and the respective consequences of filing jointly or not given your family’s specific circumstances.
For more information contact San Diego Attorney Raymond Schimmel
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