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Bankruptcy FAQ

When married, how does bankruptcy work?

On Behalf of | Aug 11, 2017 | Personal Bankruptcy

Bankruptcy is an inherently complicated process that will leave filers feeling confused about what the next steps are for them. Bankruptcy is certainly meant for individuals, but there are obviously situations where one spouse in a married couple needs to file for bankruptcy. So how does this work? How does it affect the other spouse? And what can the filing spouse expect going forward?

To answer the question of “can one spouse file for bankruptcy?”: Yes. One spouse can file for bankruptcy and it does not mean that the other spouse is bankrupt, or that he or she gets tied up in the legal logistics of the case. The filing spouse gets the benefit of the automatic stay and the ultimate discharging of their debt — not the other spouse.

However, this does not mean there is a complete separation when a bankruptcy is filed. For example, the spouses are likely to own some jointly-held assets, and these assets can lead to creditors going after the non-bankrupt spouse to collect. This is not a shady tactic by creditors — it is quite legal if you and your spouse jointly own assets. 

Of course, rarely are any bankruptcy and marriage as straightforward as we are laying out here in this post. There are complications and unique circumstances in any case. What is important for the spouses involved in any bankruptcy to realize is that there will be different scenarios that you have to confront. The best way to adequately address these matters is with experienced legal representation by your side.