Can I File Bankruptcy Without My Spouse?

• January 27, 2021
• Bankruptcy

Indiana is a non-community-property state, which means that you can file bankruptcy without your spouse. You have the option of filing as an individual or as a couple, depending on which option works best for you.

Here are some examples of non-community property:

• Items you brought into the marriage that were purchased in your name only
• Real estate, vehicles, etc. that you purchased without your spouse as co-owner
• Personal loans or mortgages that your spouse did not co-sign.

While bankruptcy can feel like a scary process, it can also be the best way to get a fresh start. The key is to find an affordable bankruptcy lawyer who can explain the legal system, answer your questions, and support you as you walk through the process. Attorney and CPA Jerry E. Smith and his legal team have helped hundreds of clients who faced the same financial difficulties you are. Whether you file bankruptcy alone or with your spouse, we will provide reassurance, wisdom and legal know-how.

Get Hope. Get Help. Get Peace of Mind.

Can one spouse declare bankruptcy and not the other?

In a non-community-property state like Indiana, one spouse can declare bankruptcy without the other. This is helpful if you want to avoid including your spouse’s solely owned assets as part of the bankruptcy. For example, in Indiana if your spouse bought his or her car in their own name (you are not the co-owner), then that vehicle belongs exclusively to them and is not communal property. If you file bankruptcy as an individual, your spouse’s vehicle would not be subject to the bankruptcy. On the other hand, if you and your spouse are co-owners of assets — such as a vacation property, boat or valuable artwork – then each spouse is responsible for their partner’s debts.

In some cases, it is better to file for bankruptcy as a couple. In other cases – such as when one spouse has non-dischargeable debts like student loans, alimony or unpaid taxes – it may be better to file as an individual. In addition, there are times when a spouse does not want to file bankruptcy jointly because they don’t want it to impact their credit score or finances. A skilled Indianapolis bankruptcy attorney can discuss the pros and cons of each option so you can decide which way is best for your situation.

What are the different kinds of bankruptcy?

There are different options for an individual’s or a couple’s bankruptcy. Generally, you can choose between Chapter 7 or Chapter 13 personal bankruptcy, depending on your financial circumstances. (There are also Chapters 11 and 12, but those are for businesses.)

Chapter 7 Bankruptcy

Chapter 7 bankruptcy is the most common and simplest type of bankruptcy protection for individuals. It is often referred to as “liquidation bankruptcy,” which means that assets are sold to pay secured debt to creditors. Chapter 7 is also sometimes used by small businesses.

After liquidating assets to pay secured debt, most or all of your unsecured debt is discharged. An affordable Indianapolis bankruptcy lawyer will help you discharge credit cards, personal loans, department store credit, and other similar debt. Student loans, alimony and child support typically cannot be eliminated through bankruptcy. Chapter 7 is codified at 11 U.S.C. §§ 101(41), 109(b).

Chapter 13 Bankruptcy

Chapter 13 bankruptcy is known as wage earner’s bankruptcy. Under Chapter 13, a client develops a plan to repay all or part of their debts by making payments over three to five years. During this time, creditors can’t start or continue collection efforts. That means all the harassing phone calls and letters stop immediately. If all goes according to plan, your dischargeable debts will be eliminated. It’s important first to evaluate the total value of your debts. Generally, anyone is eligible for Chapter 13 relief as long as their unsecured debts are less than $419,275 and secured debts (debts where you agree property can be used as collateral) are less than $1,257,850. These amounts are subject to change, so it’s important to double-check them with your bankruptcy attorney. Chapter 13 is codified at 11 U.S.C. § 1322(d).

Bankruptcy is based on U.S. federal law. Bankruptcy Basics at U.S. Courts provides general information about federal bankruptcy laws and the bankruptcy process. It is not a guide for filing for bankruptcy, but it can provide answers to many of your questions.

Divorce and bankruptcy in Indiana

If you and your spouse are in the process of getting a divorce, then it’s really important to talk to a lawyer before filing for bankruptcy. Debt and financial pressures can cause a marriage to break down, so it’s not uncommon for divorce and bankruptcy to coincide. The best option may be for you to jointly file for bankruptcy before divorcing. If your divorce is already final, it is understandable that you may be facing significant financial hardships because you’re now maintaining a household with only one income. Filing bankruptcy might be your path to a fresh start.

If one spouse has already filed for bankruptcy individually and had their debts discharged, the other spouse will still be responsible for any co-owned or co-signed debt. This can be particularly devastating if you’re going through a divorce but are still liable for outstanding debts.

Are you ready for a fresh start?

When you’re overwhelmed with significant debt and don’t know where to turn, attorney and CPA Jerry E. Smith can provide hope and a path forward. Our law firm is focused on helping consumers solve their debt problems, including tax problems, and helping distressed homeowners save their homes. Whether you’re filing for bankruptcy as a couple or without your spouse, there are various options available. We can explain bankruptcy law, answer your questions, and walk beside you each step of the way. We understand that you may be scared or ashamed, but you don’t have to be. You can breathe easy. Together, we got this. Call us for a free one-hour initial consultation about your situation at (317) 917-8680.