Marriage and Bankruptcy

Are Both Spouses Required to File Bankruptcy? 

As a former state court Magistrate who presided over nearly 18,000 family hearings and the former President of the Florida Association of General Magistrates and Child Support Hearing Officers, practicing Bankruptcy law has provided me a real change of pace.  I am amazed, though, when I look at the interplay between bankruptcy and family law, how few family law attorneys “get” the bankruptcy implications of divorce.  I am going to post a series of blogs on Love and Marriage (and Bankruptcy), exploring these issues.

Joint Bankruptcy During Separation?

The first issue I address is whether a spouse can file bankruptcy without the other spouse.  This can be of special concern to  married parties who are separated, but not quite divorced.  I had a case recently where the parties where being divorced in New England, but the husband has relocated to Florida more than 90 days before the filing of the bankruptcy.  In this case, the first question the Debtor husband had was whether he had to file with his estranged wife, and where should he file. When married couples have separated and moved to different cities, a choice will have to made about where to file bankruptcy. For couples who are not getting along, this can be difficult, and filing two separate bankruptcies amy be an option if a venue can’t be agreed upon.

When the Marriage is Still Intact

This question also arises in cases of intact marriages where all, or most, of the debt of the marriage is in one parties name. The simple answer is that one spouse may file on his or her own without the other spouse. However, it should be kept in mind that if both spouses have significant debt, only a joint bankruptcy will wipe the slate clean for both spouses. If one spouse does not join in the action, when the bankruptcy for the other spouse is complete, the creditors will pursue the remaining spouse on any joint obligations to collect the full amount — not just half the debt as some might expect.

This may or may not be a problem depending on your individual circumstances.  For example it isn’t un-common for married couples to keep separate credit and charge card accounts these days.   I have another case right now where there are few assets and all of the debt of the marriage, even the mortgage on the parties foreclosed home, was all in the husband’s name.  In this case there was simply no reason for the wife to file for bankruptcy.

Careful thought and detailed review of both your assets and liabilities by an attorney should be under taken before petitioning for bankruptcy to see if just one or both spouses should consider filing.