Does my spouse have to file bankruptcy with me?

Oftentimes, clients will ask us whether it is necessary or wise to file bankruptcy together with their spouse if their spouse does not need bankruptcy.  The best way to answer this question is to understand some basic laws surrounding spousal bankruptcy in California.

You and your spouse are not required to file bankruptcy together

First, married couples are not required to file bankruptcy together.  There is nothing that requires the both of you to file jointly.  However, you should decide whether to file bankruptcy individually or jointly only after reviewing the other laws surrounding spousal bankruptcy.

Your bankruptcy should not affect your spouse’s credit score

Second, your individual bankruptcy filing generally will not affect your spouse’s financial situation or credit rating.  Just because you file bankruptcy does not mean your spouse will also become bankrupt.  However, if there are joint debts, then your spouse’s credit rating may be affected.  Joint debts are debts that both of you enter into, such as one co-signing for the other.  If you include the joint debt in your bankruptcy and your spouse continues to make timely payments, technically, the creditors should list the debt as current on your spouse’s credit report.  However, creditors don’t always do this, and they may list the debt as “discharged in bankruptcy” in your spouse’s credit report.

Community property

Third, you should understand that California is considered a community property state, whereby you and your spouse are jointly responsible for any debts either or both of you incurred during your marriage, even if you did not co-sign for them.  For example, if you financed or purchased a new car during your marriage, your spouse is responsible for the debt even if he or she did not co-sign for the loan.

Co-signed Debt

Fourth, if your spouse did co-sign for your debt, he or she is considered jointly liable for your debt.  In such a case, your spouse is still liable for a debt that you discharged in your own individual bankruptcy.

Easily add your spouse

Finally, bankruptcy attorneys like our office typically only charge a nominal fee to include your spouse if you file jointly.  This way, if the both of you decide to file bankruptcy together, you will only have to pay one attorney fee and filing fee.

Ultimately, whether you decide to file bankruptcy individually or jointly with your spouse depends on an analysis of your individual circumstance against the laws surrounding spousal bankruptcy.  Please contact our office today for a free consultation to determine whether you should file with your spouse.