Filing for Bankruptcy Separately When Married

Sometimes before or during marriages one spouse is responsible for accruing a large amount of debt, while the other spouse remains financially responsible.

If one spouse’s finances get so out of hand, they may consider filing for bankruptcy.  Spouses can also decide to file for bankruptcy jointly.

But what happens if the other spouse does not want to file bankruptcy?  It is illegal for one spouse to include the other in their bankruptcy without both individuals’ legal permission.

However, filing bankruptcy separately when married is a possibility for most couples who are considering their options when it comes to bankruptcy and their assets.

Filing bankruptcy separately when married can still impact the non-filing spouse, especially if the couple has joint ownership of properties, bank accounts, credit accounts, cars, etc.

Filing Chapter 7 Bankruptcy Separately When Married

When one spouse decides to file for bankruptcy separately from their spouse, the court will still take the other spouse’s income into consideration when determining Chapter 7 eligibility.

Both spouses’ incomes and expenses will be factored into determining the current monthly income which establishes whether Chapter 7 is appropriate for the individual.

Filing Chapter 13 Bankruptcy Separately When Married

If the filing spouse is deemed ineligible to file for Chapter 7 bankruptcy, they can still file under Chapter 13 bankruptcy.

Under Chapter 13, a trustee is appointed by the court in order to administer the repayment of debt according to a plan agreed to by the filing spouse’s creditors.

While the non-filing spouse will not be involved in the Chapter 13 repayment plan, his or her income will be considered when determining the repayment schedule.

How Can Filing Bankruptcy Impact Me

After my wife has racked up credit card debt when she lost her job, can she file bankruptcy without me? If she files separately, will or how will it affect me? Also, I know she cannot file bankruptcy without my knowledge but it scares me that she might be able to. What could potentially happen if she decides to file for bankruptcy separately while we are still married?

You’re right its illegal to file for bankruptcy on behalf of another person without their consent (a joint bankruptcy), but  the right to file bankruptcy is an individual right and can be exercised by anyone.

So yes, she can file while you are married. If she does, all of your co-signed debts will still be in your name and yes, you will be liable for them.

This issue comes up in divorces very often and usually it pushes both people into bankruptcy for just this reason, unless the divorce judgment orders the other party to pay their marital debt. I hope this helps.

This answer pertains to individuals in the state of Illinois.

Answered by:

Steven Grace
Location: Chicago, IL
Phone: (312) 493-6912