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Should a Husband and Wife file Bankruptcy Jointly

Whether both spouses should file for bankruptcy or just one spouse is a nuanced decision that can have ramifications on whether the household debt is discharged. Often times, bankruptcy is a necessity due to a looming foreclosure sale, creditors who have judgments, garnishment or defaults on credit card payments. However, it is important to decide whether one spouse or both should file for bankruptcy and the impact it may have on a spouse whom decides not to file.

Before filing bankruptcy, it is important to find out if one or both spouses are responsible on the outstanding financial obligations. It is also important to consider debts that often get overlooked and may not show up on a person’s credit report, such as medical bills and repossessions. Often times, only one spouse is financially obligated on a debt. When it comes to home buying, the promissory note is the important document to look at. Similarly, with credit cards, the credit agreement is the determining factor. Remember, being an authorized card user or on the deed or mortgage of a home does not mean you are responsible for making payments on the debt – and only one spouse may need to file bankruptcy – not both.

If you are filing due to a looming foreclosure or for other secured property reasons, it is also important to determine whether a second or junior lien will be stripped off or if a first or senior lien will be crammed down. In the Southern District of Florida, if both spouses signed the promissory note, for a lien to be altered or effected, both spouses must file bankruptcy in order to modify their lien. For example, if you have a second mortgage that both you are your spouse are obligated on and the property is underwater as a result of the first mortgage, both spouses must file a joint bankruptcy to rid themselves of the second mortgage.

An experienced bankruptcy attorney can advise a family whether it is in their best interest to have one or both spouses file bankruptcy, and the potential impacts of either decision.