Should You File For Bankruptcy Individually Even If You’re Married?
If you are married one of the first decisions you will have to make is whether or not to file for bankruptcy individually or as a married couple. You do not have to file jointly if you don’t want to. Whether to do so is an individual choice, which is based on your particular situation, but there are certain things that can help you make that important decision.
Individual or Joint Debts
If most of your debts are individual—that is, just in your name, and not in both you and your spouse’s name—it may be a good idea to file individually. A spouse in Florida is not automatically liable for the debts of the other spouse, so if your spouse hasn’t agreed to incur a joint debt with you, he or she won’t be pursued for it.
If you do have joint debts, you can still opt to file individually. However, any discharge that you receive will not apply to your spouse. That means creditors can call, try to collect, sue, or take whatever legal measures they normally would take against your spouse, if he or she didn’t join you in the bankruptcy.
Your spouse may have a double-negative, if you have joint debts but you file individually. Not only will he or she still owe the debt, and not get the benefit of the discharge that you would receive, but your spouse’s credit could still be damaged. His or her credit report won’t show that he or she filed for a bankruptcy just because you did, but his or credit report could show that part of the debt has been discharged.
Another drawback of filing individually is that you don’t get double the exemptions as you would if you had filed jointly.
One positive about filing individually is that if you as a married couple make too much money, you could fail the means test—that is, you could make too much money together to qualify for a Chapter 7, if you count both you and your spouse’s income.
Tenancy By the Entireties Exemptions
A decision to file for bankruptcy individually will not affect your tenancy by the entireties exemption. This is an exemption that property receives when property is owned by a married couple jointly. Regardless of title, the law assumes tenancies by the entireties when a married couple purchases property or opens bank accounts.
Jointly owned marital property cannot be taken to satisfy the debt of only one spouse. However, the property can be reached by creditors, if the debt is that of both spouses, even if only one spouse is filing for bankruptcy.
In other words, the non-filing spouse can lose marital property if there are marital debts being discharged in the bankruptcy, even if only one spouse files.