Can You File Separately For Bankruptcy If You Are Married
If you are married and living in California and facing Chapter 7 or Chapter 13 bankruptcy, there is always the question of whether you can file separately or if you are required to file as a married couple. The bankruptcy courts provide three options if you are married. You can file as any one of the following 1) married, not filing jointly, with declaration of separate households; 2) married, not filing jointly, with declaration of separate households; and 3) married, filing jointly.
Married filing jointly is the customary approach, but there is no simple way of determining whether it is better to file alone or with your spouse. Basically, you want to choose the option that allows you to discharge the most of your debts and keep the most of your property.
The first option is for couples that have separated and have filed for divorce or are planning to divorce. The advantage to this option is that your spouse's income is not included when you are calculating whether or not you qualify for bankruptcy. This means that you can get released from your community property debts, even if your spouse earns too much money to qualify for bankruptcy. You may be required to get a spousal waiver, waiving the right to claim exemptions in a manner that is inconsistent with the bankruptcy.
The second option allows a married person to file separately if their spouse refuses to file or if the non-filing spouse has good credit to protect. If you have recently married and you have not purchased any valuable property as a married couple and only one of you has debts then it may make sense for the spouse with the debt to file alone. You may be required to get a spousal waiver, waiving the right to claim exemptions in a manner that is inconsistent with the bankruptcy.
The third option allows a married couple to file together. Since California is a community property state, most of the debts incurred and property acquired during a marriage will be considered community property. By filing together you will make sure that you discharge all of your debts and a joint filing would probably be to your best advantage. You should get legal advice to determine Contact us, if you would like a free legal consultation.