Should I File for Bankruptcy Without My Spouse?

If you’re married and considering bankruptcy, you’ve probably wondered whether you should file jointly or alone. California is a community property state, which means filing for bankruptcy can affect your spouse, even if you file alone. According to community property laws, most couples share ownership of any property or debts obtained during their marriage. There are very few exceptions to this rule, even if the item’s title or deed only lists one spouse.

Will filing for bankruptcy by yourself protect your property and belongings?

Every case is unique. Generally speaking, all community property is included in bankruptcy. Thus, filing without your spouse may not protect your assets from liquidation unless they are not community property. This might include assets such as an inheritance or recovery from a lawsuit.

In some situations, bankruptcy law allows for certain exemptions. Bankruptcy laws are designed to give debtors a fresh start, not destroy their futures. In other words, you may be able to retain certain assets. These are called “exemptions,” and filing with or without your spouse can influence the amount of exemptions you get when you file.

In some cases, filing jointly allows you to claim more exemptions, whereas filing alone can limit the number of assets immune to liquidation.

Which debts will bankruptcy eliminate?

Only the spouse who files for bankruptcy gets his / her debts discharged. If you file alone, your spouse is still liable for both joint and separate debts.

However, any debts that fall into the “community property” category are safe from creditors, because the property is still owned by the non-filing spouse. In bankruptcy law, this is sometimes called a “phantom discharge” and only lasts as long as the couple remains married.

Looking for more information about bankruptcy and married couples? Contact our team of bankruptcy attorneys in Sherman Oaks to schedule a consultation!