Financial struggles are a leading cause of divorce. But you might be able to salvage your marriage by pursuing Chapter 7 bankruptcy to shed yourself of unwanted debt. As you think about pursuing that course of action, though, you might find yourself asking if you and your spouse should file for bankruptcy together, or if you’re better off pursuing bankruptcy on your own.
When should you file for Chapter 7 bankruptcy individually?
There are several circumstances where filing for personal bankruptcy on your own, without naming your spouse in the petition, is best. This includes the following situations:
- You carry most of the debt and your spouse has very few, if any, creditors.
- There is a prenuptial or postnuptial agreement that could help protect assets during the bankruptcy process.
- Your spouse is expected to receive a large inheritance.
- Your spouse owns a business.
- You want to protect your spouse’s ability to file for bankruptcy in the future.
Remember, if you and your spouse both file for bankruptcy, then both of your credit scores can take a hit. While this isn’t insurmountable, it can put you and your spouse in a less advantageous financial position moving forward. Also, including your spouse in a bankruptcy will likely subject other assets to liquidation when they could’ve been retained if your spouse opted not to file.
So, which bankruptcy path is best for you?
Ultimately, that’s a question that only you can answer. Before you make your decision, though, be sure you have a full understanding of the risks and rewards of each course of action. By doing so, you’ll be able to choose the bankruptcy path that gives you the brightest future possible.