Filing for bankruptcy can be an effective way to find relief from crippling debt and get a fresh start financially. If you’re married, you’ll need to decide whether to file individually or jointly with your spouse. Both options are allowable under law, but the right choice for you will depend on your unique financial circumstances.
Like most states, Virginia is a common law property state. This means that any assets and property in your name alone (called separate property) and your portion of jointly owned assets will be subject to your bankruptcy case if you file alone. In this situation, your spouse’s separate property and share of jointly owned assets will not be part of the bankruptcy case.
Keep in mind that if you file bankruptcy without your spouse, it also means that only your debts are discharged as part of the case. If you and your spouse have jointly held debts such as a joint credit card account, car loan or a home mortgage, your spouse will now be responsible for the entire debt.
There are several factors to consider when deciding whether to include your spouse on the bankruptcy filing:
- All (or most) debts are in one spouse’s name — In this situation, it is often better to file bankruptcy alone since your spouse isn’t responsible for the majority of these debts.
- All (or most) debts are comingled — If you and your spouse own most of these debts together, a joint filing may be the best option.
- Important assets are owned entirely by your spouse — If your spouse owns property in his or her name only, this property won’t become part of the bankruptcy estate if you file alone. This may help you preserve some of these important assets since they won’t be subject to liquidation in order to pay off creditors.
- The desire to protect your spouse’s credit score — If you file bankruptcy with your spouse, it will impact both of your credit scores. However, if you file alone, your spouse’s credit rating won’t be affected. This might be beneficial moving forward since your spouse would still have access to credit on behalf of the household if he or she has a good credit score. This can help you both get back on your feet financially while you rebuild your credit rating over the next few years.
The attorneys at Hoover Penrod PLC have helped many individuals and couples in the Western District of Virginia with bankruptcy cases. We’ll review your unique financial circumstances with you in order to determine whether it’s better to file jointly or alone.
If you are contemplating bankruptcy, please contact Hoover Penrod PLC using the form on this page or call 540-433-2444 today to schedule a consultation. We serve clients in the Western District of Virginia, which includes the cities of Staunton, Harrisonburg, Winchester and the surrounding counties.