Top 15 Lies About Bankruptcy. Lie #7: Both Spouses Need to File

by Brett Weiss, Esq.

June 16, 2012

Lie 7: If You’re Married, Both You and Your Spouse Have to File for Bankruptcy.
(Variant: If I File for Bankruptcy, My Spouse’s Credit Will Also Be Affected) 

Truth-o-Meter: 

In cases where both a husband and wife have a lot of debt, either individually or jointly, it may make sense and save money for both spouses to file a joint bankruptcy case….but it is never a requirement.

In fact, most of the cases we file where our client is married, only one spouse files. Sometimes, it makes more sense in a Chapter 13 case for one spouse only to file, so that if problems arise in the ability to make the Chapter 13 Plan payments, the other spouse can file to get a “second chance”. Often, where the majority of the household debt is only in one spouse’s name, we will file for the spouse with most of the debt to keep the other spouse’s credit in better shape.

And if you don’t have any joint debt, your filing will have no impact on your spouse’s credit. This is because, unless you live in a community property state, what you do individually with your credit will have zero, none, nada effect on your spouse’s credit. Even if there is joint debt, and your non-filing spouse keeps the payments current, it will not affect their credit.

Even if there is joint debt, in a Chapter 13, Section 1301 of the Bankruptcy Code imposes the automatic stay on co-debtors for consumer debt. This means that, during the Chapter 13 case, creditors cannot call, write, sue, garnish, attach, repossess or foreclose on your spouse. (Note that this does not discharge your spouse from joint debt; it only prohibits collections during your case. Once your case is over, the creditor can resume collection activity against your spouse.)

So when someone tells you that you cannot file for bankruptcy unless your spouse also files, you can confidently tell them that they’re wrong.

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Brett Weiss, a senior partner at Chung & Press, LLC, represents people and businesses in all phases of bankruptcy. He has experience in complex individual Chapter 7, Chapter 11 and Chapter 13 bankruptcy cases, and in Chapter 11 small business restructuring and reorganization. Mr. Weiss lectures nationally on bankruptcy issues. He has testified before the Federal Bankruptcy Rules Committee, the Consumer Financial Protection Bureau, and has twice testified before Congress on bankruptcy and credit issues. Brett Weiss is the co-author of Chapter 11 for Individual Debtors, and has written Not Dead Yet: Bankruptcy After BAPCPA, for the Maryland Bar Journal, as well as hundreds of blogs for the Bankruptcy Law Network. With his law partner, he recorded a 13-hour basic bankruptcy training series, and leads intensive three-day Chapter 11 training boot camps. Mr. Weiss has received international media attention in connection with his work. He was interviewed by Barbara Walters on The View, has appeared on the Today Show, Good Morning America, ABC News with Peter Jennings, the Montel Williams Show, National Public Radio, AARP-TV, the BBC World Service, German state television, and numerous local radio and television programs, and been quoted in Money magazine, The Washington Post and The Baltimore Sun, among others. Brett Weiss is the Maryland State Chair for the National Association of Consumer Bankruptcy Attorneys, a founding member of the Bankruptcy Law Network, on the board of the Maryland State Bar Consumer Bankruptcy Council, and a member of the American Bankruptcy Institute, the Bankruptcy Bar Association of Maryland, and the Civil Justice Network. He has been recognized as a “Super Lawyer” every year since 2007 for Maryland and the District of Columbia, and in 2011 received the Distinguished Service Award from the National Association of Consumer Bankruptcy Attorneys for his work on behalf of consumers across the country. Mr. Weiss is admitted to practice before Maryland and District of Columbia federal and state courts, the United States Courts of Appeals for the DC, Fourth and Eighth Circuits, The United States Tax Court, and the Supreme Court of the United States, and has been practicing law since 1983.

Last modified: June 21, 2012