Yes, one spouse can file for bankruptcy. The other might be affected too, though the bankruptcy will not appear on his or her credit report. Chapter 7 bankruptcy filings will remain on the filing spouse’s credit report for 10 years after filing, whereas Chapter 13 filings will remain on the filing spouse’s credit report for seven years.
The presence of this on a credit report may adversely affect the filing spouse’s ability to get a loan, open a credit card, etc. While it may not affect his or her credit report, one spouse filing bankruptcy can affect the other spouse in other ways.
For example, if a married couple has a joint debt together and one spouse files for bankruptcy, eliminating that debt, the creditor may still seek repayment from the spouse who did not file for bankruptcy. As long as the spouse who did not file keeps making repayments, it should not adversely affect his or her credit.
However, some property might be subject to liquidation depending on a few factors that the spouses should discuss with a lawyer, which could certainly affect the other spouse. Read on for more information about how one spouse filing for bankruptcy might affect the other spouse.
What is community property and how does it affect bankruptcy?
Texas is a community property state. In a community property state, any joint property owned by both spouses may be a part of the bankruptcy estate, even if only one spouse is filing the claim. In this case, one spouse filing for bankruptcy can affect the other spouse in that the spouse may lose that property.
So while one spouse can file for bankruptcy without it going on the other’s credit report, it can still affect the other spouse’s property. The spouse filing for bankruptcy should speak with an attorney about options available to protect property when filing, such as Texas bankruptcy exemptions or federal exemptions. If all joint property is protected by bankruptcy exemptions, this might not affect the other spouse who is not filing for bankruptcy.
What is a joint bankruptcy filing?
Section 302(a) of the U.S. Bankruptcy Code states that a couple might file a joint bankruptcy. A joint bankruptcy can discharge debts that you and your spouse owe together, and can be a better option for couples with a lot of debt in some cases. On the other hand, if you do not have any debt and your spouse has individual debt, then s/he may want to file individually.
Each case is different, and whether to file individually or jointly can differ depending on the circumstances of your finances, such as your and your spouse’s assets and debts. Discuss each option with an attorney to review which filing option might better suit your situation.
Do I need an attorney to file for bankruptcy?
While it’s true that one spouse can file for bankruptcy without the other, it’s important to speak with an attorney about the consequences and possible benefits.
An attorney can help you in many ways.
- help you understand community property law in Texas.
- provide you insight regarding which type of bankruptcy to file.
- offer instruction on the relationship between bankruptcy and credit score.
- and, counsel you about whether you should file jointly or separately.
The attorneys at Warren & Migliaccio, LLP in Plano know how confusing filing bankruptcy can be, and are ready to answer all of your bankruptcy questions. To set up a free case consultation today, call us now at 888-584-9614 or use our online contact form to set up an appointment to get started.
