A common question I receive is whether your spouse must also file for bankruptcy. The answer is no. You can file either a joint or a single bankruptcy However it may be in your best interest to do so.
1. Tye of Debt : If your credit cards, second mortgages, credit lines or any other personal debt are in both names of the spouses, it would be in your best interest to have both spouses file. The reason is, if one spouse files and the other does not, only one spouse will receive the discharge leaving the other spouse liable for the debt. However if only one spouse files, under 11 U.S.C. 524(a)(3) the creditors will not be able to collect from community property assets which include income. For example, if you file an individual chapter 7 bankruptcy and your spouse does not, a creditor for the non filing spouse would not be able to collect from any community property because it would violate the filing spouses discharge.
2. Spouses Income and Assets: Even though you do not have to include your husband or wife in your bankruptcy, you do have to include there income and assets. The reason goes back to community property. When you are married in a community property state, assets or income obtained after marriage is community property. Therefore, if you file for bankruptcy your spouse’s income and assets are also your assets and income. For example, when you file for Chapter 7 Bankruptcy you will have to qualify meaning you will have to demonstrate that your income is not high enough to be considered an abuse of the bankruptcy filing. In order to qualify you have to disclose your spouses income. Furthermore, your spouses assets will also have to listed, and if not exempt may be liquidated.
There are several other factors to take into consideration when deciding whether to include your husband or wife in your bankruptcy. However, as stated above there is no obligation to include your husband or wife but you will have to disclose their income and assets. If you have any further questions please Contact the Law Offices of Rami N. Nabi at 714 202 6529. www.oc-bankruptcylaw.com