Filing for bankruptcy is a big decision that can have significant consequences on your financial life. One of the questions that married couples often ask is whether they can file for bankruptcy without their spouse. The short answer is yes, it is possible to file for bankruptcy without your spouse. However, there are many factors to consider before making this decision.
At Macco Law Group, LLP, we offer a free consultation for individual clients throughout Long Island, Nassau County, and Suffolk County, New York to help you understand your options for debt relief. Our experienced bankruptcy lawyers can help you determine whether filing for bankruptcy without your spouse is the right choice for you. We can also help you with credit card debt, debt collection lawsuits, claim exemptions, car loans, and other issues related to bankruptcy law.
Community Property State
In community property states like New York, spouses are generally responsible for each other’s debts incurred during the marriage. This means that if you file for bankruptcy without your spouse, you may still be responsible for any joint debt that you and your spouse have accumulated. Additionally, your spouse’s income will be taken into consideration when determining whether you qualify for Chapter 7 bankruptcy. If your household income exceeds the median income for your state, you may not be eligible for Chapter 7 bankruptcy.
If you decide to file for bankruptcy without your spouse, you will need to provide information about your spouse’s property, income, and expenses, as well as any joint debt that you have. Our Long Island bankruptcy attorneys here at Macco Law Group, LLP can help you determine whether it is in your best interest to file jointly or separately.
Separate Property and Separate Debts
Another important factor to consider is whether you own any separate property or have separate debts. Separate property is property that you owned before the marriage or acquired during the marriage through inheritance or gift. Separate debts are debts that you incurred before the marriage or that are solely in your name. If you have separate property or debts, filing for bankruptcy without your spouse may be a good option to protect your property from being used to pay off joint debts.
It is important to note that filing for bankruptcy without your spouse can have an impact on your spouse’s credit rating. If you have joint debts, your bankruptcy filing may affect your spouse’s credit score. However, if your spouse has separate debts and does not file for bankruptcy, their credit rating may not be affected.
If you are considering filing bankruptcy without your spouse, it is important to speak with our bankruptcy attorneys, who can advise you on the best course of action. A Macco Law Group bankruptcy attorney can help you understand how your finances will be affected and whether filing separately or jointly is the best option for your situation. They can also help you navigate the bankruptcy court system and ensure that you remain responsible for only the debts that you owe.
Pros vs. Cons
While there are pros and cons to filing for bankruptcy without a spouse in New York State, it is important to weigh the following factors carefully and consult with a Macco Law Group bankruptcy lawyer to determine the best course of action for your individual situation. Our bankruptcy lawyers can provide valuable guidance on whether filing alone is the best option or if filing jointly with a spouse is a better solution for the couple’s financial future.
Protection of Non-filing Spouse’s Credit
If one spouse has overwhelming debt, filing for bankruptcy alone can protect the other spouse’s credit score and avoid a hit on their credit report. This is because the bankruptcy will only appear on the filing spouse’s credit report and not the non-filing spouse’s credit report.
Separate Property Protection
In a community property state like New York, each spouse is deemed to have a 50% interest in all marital assets and debts. Filing bankruptcy alone can help protect a non-filing spouse’s separate property from being seized to pay the joint debts of the marriage.
Filing for bankruptcy without a spouse can help reduce household expenses, as the filing spouse’s individual monthly income and expenses will be the primary consideration in determining eligibility for Chapter 7 or Chapter 13 bankruptcy. This may result in a lower monthly bankruptcy payment or, in some cases, no payment at all.
Filing for bankruptcy alone can help a married couple with separate financial goals make adjustments in their finances, as it allows for a clear division of debt and a fresh start for the filing spouse.
If there are joint debts that were incurred during the marriage, both spouses will still be responsible for the debt even if only one spouse files for bankruptcy. This means that the non-filing spouse may be pursued by creditors for payment of the joint debts.
In a community property state like New York, the income of the non-filing spouse may be considered in determining eligibility for Chapter 7 or Chapter 13 bankruptcy, even if that spouse is not filing for bankruptcy. This can affect the filing spouse’s ability to qualify for bankruptcy or the payment plan.
Loss of Joint Property
If there is jointly owned property, such as a home or a car, filing for bankruptcy alone can result in the loss of the property if it is non-exempt property. This means that the non-filing spouse may lose interest in the property, even if they are not responsible for the debt.
Filing for bankruptcy without a spouse can cause marital strain if the non-filing spouse feels excluded from the process or if there is resentment about who is responsible for the debt. It is important to have open communication and support during this time to ensure that the marriage is not further strained.
Chapter 7 VS Chapter 13
When filing for bankruptcy without your spouse in New York state, you may wonder which type of bankruptcy is best for your situation. The two most common types of bankruptcy for individuals are Chapter 7 and Chapter 13. Here’s a comparison of the two:
Chapter 7 bankruptcy is also known as “liquidation bankruptcy” and is designed to wipe out most types of unsecured debts, such as credit card debt, medical bills, and personal loans. In a Chapter 7 bankruptcy, a trustee is appointed to sell any non-exempt property to pay off your creditors. However, many assets are exempt under state and federal law, so you may not lose everything you own.
One of the benefits of filing for Chapter 7 bankruptcy without your spouse is that your spouse’s income won’t be included in the means test, which determines whether you qualify for Chapter 7. If your spouse has a higher income, it could disqualify you from Chapter 7 if you file jointly. Filing individually could allow you to pass the means test and qualify for Chapter 7, even if your spouse’s income would otherwise disqualify you.
Chapter 13 bankruptcy is a “reorganization bankruptcy” that allows you to repay your debts over a period of three to five years. In a Chapter 13 bankruptcy, you keep all of your property, but you must have a steady income to make monthly payments to the bankruptcy trustee. Chapter 13 is often a good option if you have significant assets that you want to protect from liquidation.
One disadvantage of filing for Chapter 13 bankruptcy without your spouse is that your household income may be lower without your spouse’s income. This could make it more difficult to come up with a repayment plan that satisfies the trustee and your creditors.
In conclusion, filing for bankruptcy without a spouse is possible, but there are several factors to consider before making that decision. The first thing to consider is whether you live in a community property state, like New York State, as this affects the responsibility for joint debts. The second thing to consider is whether you have separate property or separate debts, as this may be a good option to protect your property from being used to pay off joint debts. Filing for bankruptcy without a spouse can protect a non-filing spouse’s credit score, protect separate property, and reduce household expenses. However, there are also cons to filing without a spouse, including both spouses being responsible for joint debts, the non-filing spouse’s income being considered, and the loss of joint property. It is important to consult with a bankruptcy attorney who can help determine the best course of action for your individual situation. At Macco Law Group, LLP, our experienced bankruptcy attorneys offer a free consultation to help you understand your options for debt relief and can provide valuable guidance on whether filing alone is the best option or if filing jointly with a spouse is a better solution for your financial future.