Can You File Bankruptcy Without Your Spouse? Yes!
You may file bankruptcy without your spouse regardless of whether your are pursuing a Chapter 7 or a Chapter 13 bankruptcy. That a married couple must file bankruptcy jointly is one of the Bankruptcy Myths addressed here. It is a common misconception of prospective clients who sit down with The Hilla Law Firm, PLLC to explore their options in bankruptcy that this is the case---but a misconception it is. There are many reasons why one married partner might prefer not to file although the other partner is, such as the desire to maintain one individual's credit rating or a lack of joint or equivalent debt levels or even reasons pertaining to the property owned by one spouse vs. another. However, "leaving a spouse out of it" does not fully relieve the spouse of a certain level of participation in your bankruptcy process.
If You File Bankruptcy Without Your Spouse, Certain Information Will Still Be Required From Them.
Certain information must be provided by both partners, even if you file bankruptcy without your spouse. First, unless the married partners are legally separated and are maintaining completely separated households, documentation proving both partners' actual, earned gross income is required for each of the 6 months prior to the month in which the bankruptcy petition is being filed for purposes of the Means Test. This will not vary by geographic area as it is required by the Federal Bankrtupcy Code. The Means Test is a mathematical formula that computes an average household monthly income for that 6-month period and determines whether the filer's household income is above or below the median income for their state. If they are above the median, there is a presumption of fraud that must be rebutted for the petition to avoid being dismissed. If they are below the median, the petition should succeed. Thus, your non-filing spouse will need to provide pay-stubs or other documentation of all income earned for the 6-month period of time prior to the date the Chapter 7 or Chapter 13 petition is filed. If your spouse is unwilling to provide the information, this can complicate your case greatly, though it should not stop you from consulting an experienced Michigan bankruptcy lawyer such as those of The Hilla Law Firm, PLLC to discuss your options.
Can you Filing Bankruptcy Without Your Spouse? Yes, and Their Expenses Can Benefit You
Both with regard to the Means Test and with regard to the general averaging calculation of your household monthly income and expenses that occurs elsewhere in a Chapter 7 or Chapter 13 bankruptcy petition, your non-filing spouse's personal, necessary expenses that do not contribute to the overall household can be accounted for so as to "back out," often, a significant portion of the income they earn that is reported in your bankruptcy petition. The Means Test, although described rather simplistically here, actually allows for various deductions once the household income is averaged that may, once applied to reduce the overall household income, allow a prospective debtor whose household is actually a little above the median income in Michigan for a household of their size to pass through into Chapter 7 eligibility. One of these deductions is known as the "marital deduction." This is a deduction for a non-filing spouse's own personal expenses, as described above. Thus, if your non-filing spouse has his or her own credit card payments, own student loans, business expenses, even non-household-related recreational expenses, these line-items can be deducted from your household Means Test average and deducted along with your other necessary household expenses elsewhere in your bankruptcy petition, whereas your credit-card payments will not (since they are being discharged). The marital deduction is one of the healthiest deductions available in the Means Test, but it takes an experienced bankruptcy practitioner to compute properly and to understand what can and what cannot be fairly deducted. The presence of a non-filing spouse whose income may be the reason that you are "failing" the Means Test for Chapter 7 bankruptcy eligibility is one of the best reasons to seek the advice of an experienced Michigan bankruptcy lawyer before filing and not attempting to "go it alone."
Can you File Bankruptcy Without Your Spouse in a Chapter 13 Bankruptcy?
You file bankruptcy without your spouse in Chapter 13 bankruptcy just as in a Chapter 7 bankruptcy. However, a Chapter 13 bankruptcy works a little differently than a Chapter 7 bankruptcy, which offers a complete, blanket discharge of all debts that have not been deemed "non-dischargeable" by the Bankruptcy Code. A Chapter 13 bankruptcy is a "payment plan" or reorganization bankruptcy in which you repay some of what you owe over 3-5 years by entering into a Federal Court-enforced payment plan in which you send a monthly payment to the Chapter 13 bankruptcy trustee at the Bankruptcy Court, which the Trustee then uses to repay your creditors in a certain order and to a certain extent. As with the Means Test and to varying extents depending upon the jurisdiction in which you file your Chapter 13 bankruptcy case, your entire household income is also utilized to determine the amount of your monthly Chapter 13 bankruptcy plan payment, even if part of the household's income is derived from a non-filing spouse. Thus, in a Chapter 13 bankruptcy, the "marital deduction" is extremely important. Your spouse cannot be forced under many factual circumstances to repay your debt through your individual Chapter 13, but the Bankruptcy Code also requires that all available household income be dedicated to your Chapter 13 Plan. Itemizing your non-filing spouse's non-household and personal expenses and back those expenses up with supporting documentation will be required in a Chapter 13 bankruptcy in order to limit the amount of your non-filing spouse's own income that must be contributed to your Chapter 13 bankruptcy payment plan.
Can You File Bankruptcy Without Your Spouse? Yes---But Will It Affect Their Credit?
However, regardless of whether you file a Chapter 7 or a Chapter 13 bankruptcy and regardless of any documentation or other information required to be provided by your non-filing spouse, your bankruptcy will not affect your non-filing spouse's credit-report, credit-score, or credit-worthiness. This is another common Bankruptcy Myth. Your bankruptcy is tied specifically to you, to your Social Security Number, and to no one else's. Your bankruptcy will not discharge your non-filing spouse's debt (and, thus, if you hold any joint debt between you, your non-filing spouse will remain liable for the full remaining balance of the debt after the bankruptcy---unless it is paid in full via a Chapter 13 bankruptcy payment plan)---but neither will your bankruptcy adverseley affect your spouse's credit. If you are a Michigan resident and are considering filing for bankruptcy, please contact us at (866) 674-2317 or click the button below to schedule a free, initial consultation.