Do Married Couples Have to File for Bankruptcy Together in Arizona?
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Bankruptcy is a personal decision that is not made lightly, and our Tucson bankruptcy attorney, Eric Ollason, respects the choices of single individuals and married couples alike who make the determination to pursue their debt-free legal options, no matter where they live in Arizona.
For married couples, it is not uncommon for a spouse who comes into a marriage with outstanding bills to file bankruptcy individually and keep the debt-free partner out of bankruptcy court. It also is not uncommon for one spouse to take on a significant amount of debt without their spouse’s involvement and want to pursue bankruptcy alone as a result. This is especially true if one spouse would like to maintain their good credit rating and avoid involvement in the process altogether.
If you are married and are considering filing bankruptcy individually in Arizona — without your spouse’s involvement — there are several factors you should both consider before pursuing bankruptcy.
First: You Can File Bankruptcy Individually, Even When You Are Married
While many spouses file for bankruptcy together to cover joint debts, married individuals can pursue bankruptcy on their own in the State of Arizona.
One reason married individuals file for bankruptcy on their own is to preserve their spouse’s existing credit rating and prevent any damage to their credit history or score going forward.
Filing bankruptcy is a unique process that becomes even more involved when the filer is married but filing as an individual. To ensure your rights — and those of your spouse — are protected during the process, it is important to talk to our Tucson bankruptcy attorney, so you know exactly how this decision will affect your household.
Second: Joint Marital Debt Will Not Be Fully Discharged During Bankruptcy
Do you and your spouse hold several joints accounts you are seeking relief from paying?
Simply put, if you and your spouse are both named in the debts you are filing bankruptcy to erase or, depending on the type of bankruptcy you are pursuing, reorganize, these joint debts will not be discharged completely.
Since you are the one filing for bankruptcy, the process may resolve your outstanding debt, but it does not absolve your spouse from paying his or her share of the account’s balance. This is true for credit cards, mortgages, and other co-signed debts the two of you have obtained on joint accounts.
In short, creditors can still pursue your spouse for the remaining money owed on those joint accounts after you file bankruptcy individually.
If your debts are truly individual — and do not include your spouse’s name — those debts may qualify for complete discharge, leaving your spouse safe from collection practices or having to repay any portion of the debt that did not belong to him or her.
Finally: Your Spouse’s Income Will Count During the Bankruptcy Evaluation
If you live with your spouse, both of your incomes will be calculated to evaluate your single eligibility for filing for bankruptcy.
Even though you are filing bankruptcy separately, your spouse’s income will be a factor when determining which type of bankruptcy you qualify for.
Your combined income will dictate whether you qualify for Chapter 7 bankruptcy, which is debt forgiveness, or Chapter 13 bankruptcy, which requires you to repay some or all the reorganized debt over an established period determined by the court.
Filing bankruptcy without your spouse as a co-filer requires a skilled attorney to produce results, and with over twenty years of experience in helping individuals and families get their financial lives back on track, Eric Ollason can help you determine the best approach to becoming debt free today.
What If My Spouse & I Decide to File Bankruptcy in Arizona Together?
If both spouses want to file for bankruptcy, filing jointly is the best approach to producing results for your combined household. Not only will each debt, held individually or jointly by both parties, be outlined for the bankruptcy chapter that is best for you both, filing jointly will allow you to consolidate your filing and attorney’s fees.
If you are considering filing bankruptcy individually or as a married couple, contact our experienced Pima County bankruptcy attorney, Eric Ollason, today at (520) 791-2707 to schedule a free consultation. We will thoroughly outline your case to pursue debt solutions that can help you get your financial well-being back.