Everyone understands that facing financial hardship can be extremely difficult, both mentally and emotionally. It is also no secret that financial challenges can place a strain on marriages. The bankruptcy code is a powerful tool that can be successfully used to eliminate debt; stop garnishments, repossessions and foreclosures; and obtain a fresh financial start.
However, some people in the middle of a credit crisis may be reluctant to use this tool for fear that it will negatively affect a spouse with good credit. The good news is that there is absolutely no requirement that both spouses file bankruptcy together.
Although filing together is certainly an option, there are many circumstances in which it may be advisable for only one spouse to file bankruptcy. In most cases, when one spouse files for bankruptcy individually, the other spouse will not be financially impacted.
There is one caveat to be aware of for those married individuals who choose to file for bankruptcy without their spouses. When filing for Chapter 7 bankruptcy, debtors must meet the requirements of the Chapter 7 Means Test.
Essentially, this takes into consideration the average household income over the past six months.
If that income is above the median income for a particular jurisdiction, the debtor may have to file Chapter 13 rather than Chapter 7. A non-filing spouse’s income must be used to determine whether a debtor qualifies for Chapter 7 under the means test if that spouse’s income contributes to household expenses.
This post is an overview of bankruptcy law and is not offered or intended to be used as legal advice. An experienced Ohio bankruptcy attorney can help you determine whether you qualify for Chapter 7 under the means test and whether filing individually, without your spouse, is advisable in your specific situation.