Should Your Spouse File For Bankruptcy?

Whether married couples in debt should both file for bankruptcy depends on the nature of the debt. This brings us to another set of definition about separate and community debts. A debt may be a separate debt if it is in your name only. If you have been married for a short time, your debts are more likely to be considered community debts. A debt may be a joint debt if both spouses signed a contract for the debt, as in the case of a home loan or credit card agreement.

Nevada is a community property state where the income of both spouses is considered community property, as is in any property they acquire during the marriage. Since all of the community property is available to pay community creditors and any other creditors of the spouse who has filed for bankruptcy, the filing of one spouse could have a significant impact on the other. Filing by one spouse may be noted on the non bankrupt credit record. If you and your spouse both file for bankruptcy, then the bankruptcy will eliminate each spouse’s debt as well as all jointly held marital debts.

When two spouses file together on a joint petition, their bankruptcy estates remain separate, unless the court orders them to be consolidated. You should be wary of a joint filing if you have marital problems that appears to be leading to divorce court. Your best bet is to seek the counsel of a bankruptcy lawyer well versed in the laws of Nevada state.

If you both and your spouse file for bankruptcy at the same time, only one case-filing fee with required charges will have to be paid to the court in a Chapter 7 or 13 case. State law may, however, require separate homestead deeds.

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