Can I File for Bankruptcy Without My Spouse?
Because Iowa is not a community property state, spouses are only responsible for each other’s debts if they assume those debts; for instance, by co-signing on a loan. Therefore, married couples do not have to file for bankruptcy together in Iowa. Generally, it makes the most sense to file for bankruptcy with your spouse when you have joint debts and without your spouse when the debts are only in your name.
How Is Your Spouse Affected If You Choose To File for Bankruptcy Without Them?
Filing for bankruptcy without your spouse will deny them the same full protection you will receive. After you file a Chapter 7 bankruptcy, the automatic stay that prevents creditors from collecting from debtors will only apply to you. Your spouse will remain unprotected, and creditors may try to collect payments from your spouse if you have joint debts. Additionally, if you file a Chapter 7 bankruptcy without your spouse and obtain a bankruptcy discharge, the discharge will only eliminate your obligation to pay debts. Your spouse will remain liable for any joint debts.
On the other hand, if you file a Chapter 13 bankruptcy without your spouse, and plan to pay the debts through a repayment plan, your spouse will be protected by the co-debtor stay if you have joint debts, as long as the injunction remains in effect.
If you and your spouse don’t have joint debts, your bankruptcy should not be noted on your spouse’s credit report after you file for bankruptcy without them. Suppose your spouse receives a negative rating on their credit score after you file bankruptcy without them, even though you don’t have joint debts, you should address the issue immediately with the credit reporting agencies. On the other hand, if you and your spouse have joint debts, your bankruptcy will most likely be noted on their credit report when you file for bankruptcy without them.
To File Jointly or Separately When Joint Debts Are Involved?
Sometimes, spouses with joint debts choose to file for bankruptcy separately. Spouses might decide to do so for various reasons. For example, if the two are having marital issues, they may choose to each file individually.
When joint debts are involved, deciding whether to file jointly or separately is crucial. Even though you have the right to choose to file separately even when you both are liable for the same debts, filing jointly bears several benefits. For example, when you file together, you save costs.
Even so, consult a bankruptcy attorney before deciding how to file for bankruptcy in a marriage situation. This is because several factors need to be considered before making a decision. For example, you need to consider how marital and separate property is affected under all the options.
Contact a Southeast Iowa Bankruptcy Lawyer Today
Deciding to file for bankruptcy is not easy for anyone. Unfortunately, if you are married, you might face more complications when handling bankruptcy matters than unmarried individuals. If you need help deciding whether to file for bankruptcy; with or without your spouse, separately, or jointly, contact the Southeast Iowa bankruptcy attorneys at the Noyes Law Office, P.C., today to schedule a consultation.