Can a Wife File Chapter 7 With a Husband If All the Debt Is in the Husband's Name?
- Chapter 7 is the most common form of bankruptcy for individuals. It is sometimes referred to as straight bankruptcy or liquidation bankruptcy. During a Chapter 7 bankruptcy the petitioner's non-exempt assets are turned over to a court-appointed trustee, who liquidates the assets and uses the proceeds to pay the creditors. The petitioner and the petitioner's spouse must provide the court with certain specific information regarding all household income and liabilities, even if only one spouse is filing for bankruptcy. This allows the court and other interested parties to accurately assess the petitioner's financial status.
- Bankruptcy law permits married couples to file a joint petition for bankruptcy, regardless of whether only one spouse had income or debts. The couple must provide the court with a complete list of its debts, including the names of its creditors, the types of debt and the amounts owed. Both spouses must list all of their regular income, including the source of their income, how often they are paid and how much they receive. Married couples must also provide a complete list of their assets and regular living expenses.
- Married couples may consider filing a joint petition for Chapter 7 bankruptcy when only one spouse has all the debt in his name if the couple resides in a community property state. Community property states consider debts incurred by one spouse during the course of the marriage to be the debt of both spouses. If only one spouse filed for Chapter 7 bankruptcy, his debts may be discharged, but the creditors would still be able to pursue collection efforts against the other spouse, even if the debt is not in her name. Community property states include Washington, Arizona, New Mexico, California, Louisiana, Idaho, Nevada, Texas and Wisconsin.
- Most states are common law states, which do not confer joint ownership of debt to married couples unless both parties signed the credit application, or, in some cases, where the benefit of the debt obviously extends to both the husband and the wife. A wife who has no debt in her name always has the option of filing a joint Chapter 7 petition with her husband, but she may elect not to do so to preserve her credit rating.