If you are married and considering filing for bankruptcy, you need to stop what you’re doing and make an appointment with a bankruptcy attorney. The next decision you make will affect you, your spouse and the rest of your family. There is no universal right or wrong answer for whether you should file single or with your spouse. However, a bankruptcy lawyer can help you understand the impact of either decision and what the best course of action might be.
Joint Petition vs. Single Petition
Typically, when filing for bankruptcy while married it is because both you and your spouse are struggling financially. When filing either Chapter 7 or Chapter 13 bankruptcy, a joint petition means all dischargeable debts from both you and your partner are included in your bankruptcy filing. On the other hand, the spouse not filing for bankruptcy is responsible for their separate debt and, until a discharge is issued, community debt. So, if the vast majority of debt is held by you and your partner either does not have any debt or there are very few joint debts with both of your names on it, filing as a single petition bankruptcy may be more desirable.
If possible, you might consider filing for bankruptcy before getting married, or having a prenuptial agreement in place before marriage that you will file singly.
Impact on Credit Score
If both of you file as a joint petition, you may both see the same negative impact of a bankruptcy on your credit report. Ideally, if you can save one credit score you should. This way, at least your spouse can qualify for a vehicle or home loan. On the other hand, a jointly filed bankruptcy could reduce your individual debt as two of you work to recover together. As the two of you work to build your credit score back up, you both can have joint accounts which will help add beneficial information to your reports faster, which means you may be able to improve your credit score quicker as a joint petition instead of a single petition. As an individual, a bankruptcy affects your credit score the same, regardless of whether it is joint or single.
Your bankruptcy lawyers in AZ can help you look over the kinds of debts held and point to whether or not it is better to file as a single or joint petition.