Do both spouses have to file for bankruptcy?

Many Michigan residents have started their lives afresh after filing for bankruptcy, and you may be considering joining their ranks, or maybe your spouse is. Whichever scenario you are in, you could be wondering, “Do both spouses have to file?”

The answer is no, although both spouses filing makes sense in some situations.

Whose name is on the debts

Say that one spouse has racked up significant credit card debts and medical debts. The credit card and medical bills are in that spouse’s name only, while the other spouse has no debts. In such a case, it could make sense for just one spouse to file. However, say that the credit card is in both spouses’ names. It does not matter if only one spouse really uses the card since both spouses are legally responsible for paying it. In such a scenario, it might make sense for both spouses to file together.

How the filing spouse could be affected

If you are filing and your spouse chooses not to join, you still have to list your spouse’s income. Depending on what it is, it could hinder a Chapter 7 petition from being accepted or make it much more complicated. A marital adjustment deduction helps in some cases, but plan for a tricky road if you file alone and your spouse is a high earner.

How a nonfiling spouse could be affected

Someone who decides not to file for bankruptcy with their spouse could be seriously affected as well. Say that Spouse A files. The house title and mortgage are in A’s name only, although Spouse B has lived there for years as well and maybe even gives A money every month to help pay the mortgage. In such a case, B faces uncertainty over his or her living situation, and it can be a stressful experience not knowing what is going on with the bankruptcy. Meeting with a lawyer can clarify many issues and help spouses decide whether to file singly or together.