Married Couple in Debt? Know Your Bankruptcy Options


Filing bankruptcy to have a fresh financial start is something you could consider if you are overwhelmed with the debts you are unable to pay. In case you are married, the biggest dilemma is deciding whether to file bankruptcy individually or jointly.

Every bankruptcy situation is unique and distinct in its way. As a married couple determining whether you should file jointly or separately depends upon various factors such as your debts, state law, assets or property you own and more. This decision is crucial as it can affect how much of your debts are discharged and how much of your property you get to keep. The Colorado, bankruptcy lawyers can help you make a wise and beneficial decision. 

If both of you are facing trouble with your debts, either as a couple or individually, you can consider filing bankruptcy jointly as it allows you to put all your information on one set of forms, pay one filing fee and also pay lawyer’s fees only once. The entire property on your name as well as on your spouse’s name will become part of the bankruptcy estate and all debts of both of you will be included in the filing. 

There are several situations in which a spouse wants to file bankruptcy individually and you might have your own reasons. For instance, if you want to purchase a house in the near future, you can prevent your spouse’s credit from getting damaged, if you file separately and but the house on your spouse’s name. 

However, it is important to know how filing bankruptcy individually can affect your spouse. Here are some of the factors to be considered:


Even if you file individually the court will look at the income of your spouse too along with yours. Income is a significant factor in bankruptcy and it determines under which bankruptcy Code, you qualify for. The income of your spouse (non-filing) will be disclosed when you will file the petition. However, your spouse’s job or wages will not be affected by your filing for bankruptcy. You can only qualify for Chapter 7 bankruptcy as a couple or individual if your total household income fewer expenses allowed by the court are not considered as abuse. 

Chapter 7 or 13 for Joint Debt, with the non-filing spouse

The main reason creditors held both the spouses responsible is if one file for bankruptcy, they can get the collection done the other spouse. If you file for Chapter 7 bankruptcy in the co-debtor situation, then only debts will be discharged. Your spouse will remain fully liable for the joint debt and creditors will pursue him/her for payments. However, in chapter 13 bankruptcy, an automatic stay comes into effect preventing the collection from the non-filing spouse. This is known as the Section 1301 co-debtor stay.

Credit Report

The bankruptcy filing will appear on your credit report and not on your spouse’s (non-filler). If it appears on your spouse’s report, the credit reporting agencies can be contacted and immediately made to rectify the error. The credit of your spouse won’t be affected by you filing for bankruptcy and he or she will continue to have access to credit on behalf of the household. Moreover, your spouse can help you to re-establish your credit by co-signing for new debts. 

Examine your assets

It is important to consider what kind of debt you want to get rid of and also who owns which assets while deciding who should file bankruptcy. Once you or your spouse files for a Chapter 7 bankruptcy, then all the assets owned by you or your spouse will become part of the bankruptcy estate and will be liquidated by the trustees in order to pay the creditors. 

Different situations, debts and the property you own decision whether you should file jointly or individually and who should file bankruptcy you or your spouse. 

For example, if you own the less than a year car and your spouse owns a house on his/her name only and most of the debt that is holding back both of you is the debt accumulated by you, then it will be more sensible for you to file bankruptcy. In such a case, if you file bankruptcy, the house will be prevented from becoming part of the bankruptcy estate.

Deciding if both you and your spouse file for bankruptcy, whether to file for Chapter 7 or Chapter 13 bankruptcy is an informed decision. Moreover, each couple has a different situation and ensuring the protection of your property as much as possible is a complex task. So consulting the experienced Colorado bankruptcy lawyers can help you make the best decisions.