Can You File for Bankruptcy Without Your Spouse in Connecticut?

If you are married and have accumulated a significant amount of debt, you might be wondering, “can you file for bankruptcy without your spouse?” The answer is yes; both Chapter 7 and Chapter 13 bankruptcies can be filed jointly or without your spouse in Connecticut. Importantly, you might want to file for bankruptcy without your spouse if the debt is mostly in your name or you want to protect your spouse’s credit. There are benefits and drawbacks to each option which must be carefully weighed, depending on your financial situation.

Key Takeaways

• You can choose to file for bankruptcy without your spouse or jointly in Connecticut.
• Unlike in divorce proceedings, where Connecticut courts sometimes treat debts incurred during the marriage as joint obligations,bankruptcy law distinguishes individual debt from joint held debt.
• A spouse’s individual bankruptcy filing generally does not impact the non-filing spouse’s credit score. However, their income and assets may still need to be disclosed to the court during the legal process.
• Filing for bankruptcy individually does not eliminate a non-filing spouse’s responsibility for joint debts. In a Chapter 7 bankruptcy, creditors can pursue the non-filing spouse for repayment. However, a Chapter 13 bankruptcy filing offers the non-filing spouse protection during the repayment plan period.

What’s the Difference Between Individual versus Joint Bankruptcy?

The difference between individual bankruptcy and joint bankruptcy is whether you file on your own or with your spouse. However, in understanding the distinction between filing a joint bankruptcy or as an individual, it’s important not to confuse the divorce and bankruptcy rules when it comes to how debts incurred during marriage are classified.

In matrimonial matters, Connecticut is an equitable distribution state. This means courts consider any assets acquired or debts incurred during the marriage to be “marital” for the purpose of division in divorce, regardless of whose name it is in. The bankruptcy rules are different. Any debts in your name are your own, even if you are married. Debts that are in both your name and your spouse’s name are joint.

Can Filing for Bankruptcy Individually Impact Your Spouse?

Filing for bankruptcy individually may make the most sense if the debts are solely in your name. Even if your spouse is not included in the bankruptcy filing, it can still impact them in certain ways. For instance, their income and assets may still need to be disclosed to the court. However, it’s essential to understand that your individual bankruptcy filing would not impact your spouse’s credit score.

Significantly, if both you and your spouse are listed on a debt (whether it is a joint credit card or loan), your individual bankruptcy filing does not eliminate your spouse’s responsibility to repay it. A creditor can still pursue debts from a non-filing spouse in a Chapter 7 filing since the automatic stay only protects the spouse who filed. In a Chapter 13 filing, the automatic stay protects the non-filing spouse from creditor collection on joint debts during the course of the repayment plan. This is called the “co-debtor stay”.

In addition, when the bankruptcy trustee determines whether any property can be sold to pay creditors, they may consider all assets jointly held by both you and your spouse. But the available exemptions in Connecticut often protect most household assets.

Is it Better to File for Bankruptcy with Your Spouse or Individually?

It’s critical to carefully consider whether filing for bankruptcy without your spouse or jointly is the right choice for you. Neither option is necessarily “better” than the other, but will depend upon your specific objectives and financial situation. Filing jointly might make sense if most of the household debt is shared between you and your spouse, you are each facing financial hardship, and you are both looking for a fresh start financially. By filing for bankruptcy together, you would both benefit from having your debts discharged in a Chapter 7 filing, or reorganized in a Chapter 13 filing, and only have to pay one filing fee.

However, some benefits of filing for bankruptcy without your spouse include:

• Protecting your spouse’s credit: If your spouse has strong credit they wish to safeguard, your individual filing would not harm their credit score.
• Preserving bankruptcy relief for the other spouse: Depending on the type of bankruptcy, there is a two to eight year waiting period to file again. If one spouse files individually, it preserves the other spouse’s option to file later in the event of unanticipated financial difficulties.
• Avoiding inclusion of the other spouse’s debts: If most of the debt is held by one spouse, filing individually can eliminate those debts without requiring the other spouse to file for bankruptcy.

Whether you file jointly or individually, the court would look at the income and assets of both spouses, regardless of whether one spouse incurred the debt on their own. Your combined income might put you over the means test threshold, which would disqualify you from a Chapter 7 filing. Additionally, even if an individual petition is filed, the bankruptcy court may still consider household income when determining a Chapter 13 repayment plan.

Contact an Experienced Connecticut Bankruptcy Attorney

If you are considering filing for bankruptcy without your spouse or jointly, it’s vital to consult with knowledgeable counsel to ensure you make an informed decision. At Lawrence & Jurkiewicz, our bankruptcy attorneys are committed to providing you with skilled representation as we help you navigate the bankruptcy process. We will discuss your specific goals and work diligently to help you achieve a positive outcome. We welcome you to contact us for a free consultation or call us at (860) 264-1551.