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Marriage often means shared finances – and shared debt. So what happens when one spouse files for bankruptcy but the other doesn’t?
This situation brings up many questions around how bankruptcy works for married couples in Raleigh, NC.
The first key fact to know is that bankruptcy laws don’t require married couples to file together. While many married filers pursue a joint bankruptcy, it’s completely legal to file individually, even if your spouse doesn’t. There are strategic reasons you may only want one partner to file.
Why Would Only One Spouse File for Bankruptcy?
Common scenarios where filing bankruptcy solo while married makes sense include:
- Only one spouse owes unmanageable debts. If much debt is in one partner’s name, individual bankruptcy may resolve those issues without impacting the spouse’s credit and finances.
- One spouse has valuable non-exempt assets. A separate filing leaves one partner with protected assets.
- Dispute over whether to file. Bankruptcy is sometimes seen negatively. So if spouses disagree over filing, one might proceed individually.
Still not sure of the best way forward? Attorney Weik can help you explore your options, both individually and with your spouse, during your consultation.
What Happens to Assets and Debts When Only One Spouse Files for Bankruptcy?
When you file for bankruptcy in Raleigh, NC without your spouse, only your individual debts and property – plus joint debts and property, are involved in your case. Your spouse’s solely-owned debts and assets aren’t included. The same applies vice versa.
With jointly-held debts and property, your bankruptcy can still impact your spouse. Joint debts owed together, like mortgages or car loans, must get listed in your bankruptcy.
Protecting Your Spouse’s Credit
A top concern is often protecting your spouse’s credit when one person pursues bankruptcy. Rest assured, bankruptcy itself only goes on your own credit record. However, joint accounts will still show that they are included in the bankruptcy on spouce’s credit reports.
That means ideally any joint debt may get closed or transferred to the person filing before you file. This keeps your bankruptcy off your spouse’s credit record.
Pre-Bankruptcy Planning is Essential
Because bankruptcy filings involve moving around debts and property, advance planning is a must. The goal is to limit the impact on the non-filing spouse, while affording the filer all the benefits and protections of bankruptcy court.
As your bankruptcy lawyer in Raleigh NC, Attorney Weik can help you maximize the protections and benefits of bankruptcy court via legal exemptions, property transfers, and other strategies.
Book Your Consultation Today
Marriage adds complexity when considering bankruptcy, but depending on the situation, it can make solid strategic sense.
Call Weik Law Office today at 919-845-7721 for a free consultation, and set up a time to speak with one of our friendly professionals.