At Helfand & Associates, in addition to family law, we have been handling individual and small business bankruptcy cases for over 15 years.
If a couple is married, they can file together and the cost is just modestly more than an individual bankruptcy although it includes the debts of both parties. Frequently, a couple even if still happily married does not agree on the issue of filing for bankruptcy.
Sometimes one feels comfortable with the process and the other does not, even if both have debt. Alternatively, there are circumstances where one partner should file because it will provide enormous relief from debts and the other partner should not file because this party has little or no debt or strategically it does not make sense. The family/couple still can obtain credit because one party is not filing.
You should evaluate the situation carefully with your attorney. Just because one party files, this does not automatically cause a negative effect to the other spouse’s credit because of marriage. Only if a debt is in joint names would the other person be affected. Further, if payments are timely on the joint debt, typically there are no consequences at all. In a bankruptcy, the debt in the debtor’s name is discharged; i.e., husband has very modest credit card debt and earns $50,000 per year.
Wife has $50,000 of credit card debt in her name alone. She also earns $50,000 per year. They have three kids. They have a house with very little equity. Wife can file. Husband does not have to. The mortgage continues to be paid. He continues to pay his own debt using his income and wife’s income. The Wife’s debt is eliminated. Husband is unaffected.
One should never, however, switch a property or debt in contemplation of bankruptcy. This would be a bad faith fraudulent act to defraud creditors, not something you want to do.
Tanya Helfand is a Certified Matrimonial attorney. She also is a long-standing member of the National Association of Consumer Bankruptcy Attorneys (NACBA). Please call our office at 973-428-0800 if you have any questions or would like to schedule a free ½ hour consultation.