Bankruptcy

What Happens When Only One Spouse Files a Bankruptcy?

By Joseph McDaniel, Esq.

So, for instance, when I was at a first meeting of creditors today in Casa Grande, I got to hear the filing spouse sputter when asked 1)WHY his wife didn't file, and 2)was his wife getting a tax refund, because if so, the trustee wanted it, even if the wife wasn't filing a bankruptcy, and 3)WHAT ASSETS did his wife own, even if she wasn't filing?

You just KNOW that debtor will be sleeping on the couch for several decades after the trustee takes his wife's car and tax refund, and whatever else looks like fun, when his wife had told him she wanted nothing to do a bankruptcy.

But wait! There's more! He'll be sleeping in the doghouse when his wife gets sued for debts that he has discharged in his Chapter 7 case, because creditors do that sort of thing. Darn creditors. But his discharge won't keep creditors from suing his wife, and they will sue her, working on the very strong presumption that debts incurred during marriage are community debts.

I've filed singleton bankruptcy cases for married folks, and gotten decent results in the past.

But it's always a bumpier road than a twofer.

Also note that the trustee wants to count the spouse's income for means test purposes.

Still, guys hate the idea of putting their wives through the process of a bankruptcy.

I always tell 'em, sure, I PREFER it if your wife doesn't file right now. And that's because I'll get paid to file your bankruptcy case, and then I can get paid to file your wife's bankruptcy case when she gets sued!

Of course, I don't prefer it. I prefer a good result for the client. So nobody has to sleep in the doghouse for several decades.

NOTHING HERE CONSTITUTES LEGAL ADVICE RE A CHAPTER 7, CHAPTER 13, CHAPTER 11, OR CHAPTER 12. FIND AN ARIZONA BANKRUPTCY LAWYER WHO IS BOARD CERTIFIED IN BANKRUPTCY LAW, AV RATED, AVVO 10 RATED, ON SUPERLAWYERS, OR JUST VERY EXPERIENCED AND A FORMER CHAIR OF SOME BANKRUPTCY SECTION OR COMMITTEE. NOTHING HERE MAY BE USED AS LEGAL ADVICE IN CONNECTION WITH ANY BANKRUPTCY, WHETHER THAT BANKRUPTCY IS IN PHOENIX, GLENDALE, TEMPE, MESA, SCOTTSDALE, OR ANYWHERE ELSE.

Full post as published by Arizona Bankruptcy Attorney Blog on February 05, 2010 (boomark / email).