At The Law Offices of Paul Y. Lee, there are some questions we get over and over, chief among them: How does marriage affect a California marriage? The answer is that one spouse is allowed to file bankruptcy and the other is not legally required to file as well. That said, there are financial benefits to filing jointly. Read on to learn more and then contact The Law Offices of Paul Y. Lee at 951-755-1000 for a free consultation on whether you should file together or separately.
If your debts are shared then you’ll likely want to file together
When one spouse files for bankruptcy, only they get debt relief and protection from their creditors. If the debt is shared, then the creditors are still able to come after the other spouse to demand repayment. While the debts of the filing spouse have been discharged, the spouses haven’t and they’re still responsible for paying their own individual debts as well as joint debts.
If one spouse has valuable assets then you may want to file separately
When you both file jointly for Chapter 7 bankruptcy, all of your property becomes part of the entire bankruptcy estate. On the other hand, if only one spouse files, then only their property and their joint property becomes a part of the estate. As a result, the spouse who isn’t filing is still able to keep their own property and assets and they won’t be vulnerable to creditors.
Filing together means both credit scores will go down
One of the biggest surprises for many people who declare bankruptcy is that it doesn’t hurt their credit score for as long as they think it will. That said, it does damage it right away. As a result, some couples choose not to both file so that at least one of them will have better credit.
You may not pass the means test together
In order to file for bankruptcy, you must pass a means test that involves your income and your expenses. If just your income is counted you may pass, while if you and your spouse file jointly, both of your incomes will be counted. This may make your household income too high and make it more difficult to file for bankruptcy.
Both spouses must consent for joint bankruptcy
The good news is that your spouse can’t include you in a bankruptcy without your consent. The bad news is that if you want to file bankruptcy jointly and your spouse isn’t on board, then you’ll have to figure something else out. It is possible for both spouses to file separately, but this is very rare. It’s generally only done if there isn’t an agreement about how to handle the bankruptcy.
Get detailed answers to your unique questions
Bankruptcy can be confusing for someone who’s never gone through it. If you find yourself wondering how to proceed or what options are best for your unique situation, then we recommend you contact The Law Offices of Paul Y. Lee at 951-755-1000 as soon as possible. We can offer a free case evaluation and get started right away.
