"My spouse is declaring bankruptcy; should he file alone or should we
Whether married couples should file a joint petition or a single one
depends on various factors: type of property, the amount of community
debt involved, and how the property is held (e.g., community, joint
tenancy, or an estate-by-the entirety).
Filing together eliminates the separate debts of you and your spouse
and all the jointly-held marital debts. Filing alone leaves the
non-bankrupt spouse still liable for his or her share of joint debts,
but wipes out the spouse's separate debts and his/her share of the
If you are legally separated, have divided your property, and taken
care of all the financial considerations, your best option may be to
have your spouse go it alone. If all the debts were incurred before
you were married, there is no point in having you both file.
Community property and common law, also called equitable distribution
are the two types of martial property ownership. The vast majority of
states apply the equitable distribution rules; nine states apply the
community property rules. If you live in a common law property state,
your spouse's bankrupt estate will include his/her separate property
and half of the jointly-held marital property. The non-bankrupt spouse
will not have to worry about the effects of the bankruptcy on his or
her separate property.
However, the bankruptcy court takes a dim view if the non-bankrupt
spouse is merely holding the property or has received the property
from the bankrupt spouse within one year of filing bankruptcy. In this
case, this transaction is considered fraudulent, and the property will
be turned over to the bankruptcy trustee.
In community property states, spouses equally own all property earned
or received during the marriage, splitting 50-50. In bankruptcy, then,
all the community property you and your spouse own jointly is part of
the bankruptcy estate, regardless whether you join in the filing.
Your separate property -- property you owned before the marriage -- is
not effected by your spouse's bankruptcy. Property held by your spouse
will be used to settle debt first, and then non-exempt community
property will be used."
Hope this helps...