Married People and Bankruptcy – Filing Individually or Jointly
Posted: September 19, 2014 by Jeffrey J. Randa
Keep My Spouse Out of It
As a bankruptcy lawyer serving Sterling Heights, a fair number of prospective married clients ask if they can file bankruptcy without involving their spouse. It is natural to want to keep your partner out of your financial affairs. Sometimes, it is possible.
There are two options for married couples who are considering filing bankruptcy (jointly or individually).
- If both spouses file, then they file what is called a joint petition. At the Law Office of Jeffrey J. Randa, there is no additional charge or fee for a joint petition. Whether a person files alone, or with their spouse, the price is the same.
- If only one spouse chooses to file, then they file an individual petition. That individual petition will not impact their spouse, unless the person filing is trying to get out of joint debt.
Let’s look at some practical and common situations. When determining which options are best for you and your family, always be sure to consult Jeff, a Michigan bankruptcy attorney. Situations vary and you want to be sure that you are protecting your spouse from financial harm.
Example 1: Donny and Marie are married. Donny files for individual bankruptcy. He owes money on a credit card on which he and Marie are cosigners. It is a joint credit card (unlike one in which a person designates another as an authorized user). When Donny claims this credit card, Marie will be left as the sole liable party. This won’t hurt her credit, but she will be responsible for resuming the payments and should not expect any help from Donny.
Example 2: If Donny and Marie file a joint petition for bankruptcy and list this jointly-held credit card, they will both be discharged from any liability for it.
Example 3: If a married person files alone, and does not list any joint debt, meaning debt that both they and their spouse share (mortgage), then there is absolutely, 100 percent no consequence to their spouse.
Example 4: If a married person lists joint debt, like a mortgage, but agrees to keep paying for it, then there will likewise be absolutely, 100 percent no impact upon their spouse. This promise of payment is called reaffirming a debt.
Example 5: If Donny lists joint debt that they will not be keeping, or reaffirming, then Marie remains liable for the whole debt, even though the Donnie’s bankruptcy claim does not cause any harm to Marie’s credit rating.
Example 6: In the case of married people filing together, they both get the benefit of being released from any further obligation on any debts they list (but do not reaffirm), regardless of whether those debts are individual or joint.
Contact the Law Office of Jeffrey J. Randa Today
The above scenarios are among the most common that we encounter at the Law Office of Jeffrey J. Randa. Every client’s situation is unique. It is always the best practice to discuss filing options with a qualified Michigan bankruptcy attorney. Call today for a free consultation. Together we can determine what your best option is for a debt-free future. You can call the Law Office of Jeffrey J. Randa at (586) 228-6523.