Married couples can choose to file for bankruptcy jointly or individually.  Whichever option you choose depends on the amount of property you own, whether your debts are joint debts or individual, and the laws of your state.

If only one spouse has debt, that spouse can file for bankruptcy individually and receive an individual discharge to wipe out those debt obligations.  The bankruptcy filing should not negatively affect the other spouse’s credit.  What happens if one spouse files and the debts are joint debts?  In a Chapter 7, the bankruptcy filing does not offer any protection to the non-filing spouse.  No automatic stay applies and the creditors can pursue the non-filing spouse for collection for the full amount of the debt.  In a Chapter 13, the nonfiling spouse does get protection from the codebtor stay, and so the collection efforts as to that spouse must stop while the Chapter 13 case is pending.

If both spouses need to file bankruptcy, filing two individual cases is possible — you can even have two individual cases under different chapters (one Chapter 7 case and one Chapter 13 case, for example) filed at or around the same time, if it would be beneficial.  But typically, since two individual filings would mean double the court costs and double the attorney fees, most couples file a single joint petition together.  Not only do you save on the filing fees and the attorney fees, you get to “double” your exemptions.

Note that if you live in a community property state (which NJ is NOT), all marital assets are considered property of the bankruptcy estate regardless of who is on the title even if only one spouse files for bankruptcy.  So, please, if you are in a community property state, consult an attorney if you are thinking of bankruptcy.

 

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