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Can one spouse file bankruptcy? Yes, but whether or not only one spouse can file bankruptcy or qualifies for bankruptcy is actually determined by considering the income, expenses, and debts of both spouses.
In order to file a Chapter 7 bankruptcy, a person cannot earn too much money. If the person earns too much, then a bankruptcy court will likely determine that the person can actually pay his/her debts and will dismiss the Chapter 7 bankruptcy.
The bankruptcy laws set forth two ways to measure a person’s income to determine eligibility for bankruptcy Chapter 7. Both methods take into consideration the person’s household income and expenses, and not just the income and expenses of the one person. Because it is possible for one spouse to earn a large amount of income and the other spouse to have a small income, bankruptcy laws require that income and expenses of both spouses be considered as the household income.
Similarly, for a Chapter 13 bankruptcy, even though only one spouse is filing bankruptcy, the income, expenses, and debts of the non-filing spouse are required to be disclosed so that the bankruptcy court, the trustee and creditors can evaluate the household's financial position to determine if the one spouse qualifies for bankruptcy.
A non-filing spouse will need to disclose:
1. The source and amount of the non-filing spouse’s income as well as the intervals when the non-filing spouse is paid.
The one spouse who files bankruptcy can have a very small income while the non-filing spouse can have a very large income. If the non-filing spouse’s large income was not disclosed, it could present a very deceptive picture of the filing spouse’s living standards and ability to pay creditors.
2. All of the non-filing spouse’s monthly expenses such as food, housing, utilities, taxes,
transportation, medical, medicine, car payments, house payments, credit card payments, etc.
Just as not disclosing a non-filing spouse’s income could be deceptive, so could not disclosing expenses. It is possible that a non-filing spouse has a large income and is paying all of the bills. Or, it is possible that the non-filing spouse could have large debts that consume most of his/her income resulting in a small net income.
3. All of the non-filing spouse’s property.
Again, like income and expenses, what property a non-filing spouse owns can have a deceptive effect if it is not disclosed.
4. All of the non-filing spouse’s creditors as well as the amount that is owed to each creditor and the basis for which the debt is owed to each creditor.
Can one spouse file bankruptcy without disclosing the non-filing spouse’s financial information? Generally, no, because to have a clear picture of the debtor’s situation, a bankruptcy court needs the non-filing spouse’s info. However, if a couple is separated and maintaining completely separate households, then the non-filing spouse’s financial information is not needed.
This is general information only. If you have any questions whatsoever, talk with a lawyer licensed in your state who has experience with Chapter 7 bankruptcy, Chapter 13 bankruptcy, or bankruptcy in general.
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