Do Husband & Wife Have To File Chapter 13 Jointly?

In bankruptcy law, there is no requirement that both spouses must file for bankruptcy together. A husband and wife have the option to file a joint bankruptcy petition under Chapter 13, or one spouse can file individually. The decision on whether both spouses should file depends on various factors, including how debts are held, state property laws, and the financial goals of the marriage. Here’s a closer look at the considerations and implications of filing jointly or individually for Chapter 13 bankruptcy:

Joint Filing Advantages

• Comprehensive Debt Relief: If most debts are jointly held, filing jointly can provide comprehensive relief, allowing both spouses to discharge their obligations and get a fresh start together.
• Cost Efficiency: Filing a joint bankruptcy petition can be more cost-effective, as it typically incurs a single set of filing fees and attorney fees, rather than doubling these costs for separate filings.
• Unified Process: Joint filing streamlines the bankruptcy process, consolidating the effort and documentation required to manage the bankruptcy, making it simpler for households to navigate.

Individual Filing Considerations

• Separate Debts: If one spouse has significantly more debt in their name only, it might make sense for that spouse to file individually. This approach can protect the non-filing spouse’s credit score and keep their separate assets out of the bankruptcy estate.
• Asset Protection: In some cases, filing individually can be a strategic move to protect the non-filing spouse’s assets, especially if those assets are separate property and not subject to community property laws (which vary by state).
• Credit Impact: Filing for bankruptcy impacts the filer’s credit score. If one spouse has a relatively good credit score or little to no dischargeable debt, it may be beneficial for only the other spouse to file, preserving one spouse’s credit standing.

State Laws and Property Ownership

• Community Property States: In community property states, all property acquired during the marriage is considered jointly owned. Filing individually in these states can still affect the non-filing spouse’s property. A knowledgeable attorney can provide advice based on specific state laws.
• Common Law States: In states that follow common law property rules, only property in the debtor’s name is included in the bankruptcy estate. This distinction can influence the decision on whether one or both spouses should file.

Non-Filing Spouse Considerations

• Automatic Stay: The automatic stay that halts collections actions applies only to the spouse who files for bankruptcy. Creditors can still pursue the non-filing spouse for joint debts.
• Co-Signer Impact: If the non-filing spouse is a co-signer on any of the debts, creditors may seek payment from them, even if the other spouse is undergoing bankruptcy proceedings.

Deciding whether one or both spouses should file for Chapter 13 bankruptcy involves careful consideration of both spouses’ debts, assets, and financial goals. Joint filing can offer a streamlined and comprehensive approach to debt relief for married couples, but individual filing may be preferable in situations where one spouse’s financial situation differs significantly from the other’s. Consulting with a bankruptcy attorney who understands the nuances of state laws and marital finances is crucial to making an informed decision that aligns with the couple’s best interests.