If you have considered filing for
Chapter 7 or
Chapter 13 bankruptcy, you may be wondering whether or not your spouse will be affected.
When you file in a community property state like Arizona, the answer is
most likely going to be yes. Filing for bankruptcy requires you to disclose
all of your assets and liabilities, which includes all of the assets and
property that has been acquired over the course of your marriage.
Community property assets may include any vehicles, houses, debts, medical
bills or credit card bills that were acquired during your marriage. If
your spouse is not included in your
bankruptcy, a creditor could sue you and/or your spouse for any debts that were not
included when you filed. For this reason, it is usually recommended that
you also include your spouse’s debts when you file for bankruptcy.
What if my name is not included on my spouse’s debt?
When you are married, all debts are shared between you and your spouse.
Even if your name is not directly associated with certain debts (i.e.
medical bills or
credit card debt), you are just as liable for repaying them as your spouse. You may not
even know that your spouse has signed up for certain credit cards that
have now incurred debt, but unfortunately, that does not make you any
less liable.
Benefits of Filing for Bankruptcy with Your Spouse
Since Arizona is a community property state, most couples will decide to
file for bankruptcy together. Not only is it more cost-effective, but
it can also get rid of your debts more effectively. Some individuals think
that excluding their spouse from the bankruptcy would help them to quality
for Chapter 7, but this is not true. Both spouses’ income would
be included in the total household income in
the means test.
One significant benefit to filing jointly, however, is that married couples
are allowed to double certain
property exemptions—meaning that you may be able to keep more of your property. State
exemptions account for assets like your home, vehicles, insurance benefits
and personal property, and many of them allow for “doubling”
when a married couple files together (except for the homestead exemption).
Some of the most important property exemptions include:
-
Bank Accounts: You can exempt up to $300 in one bank account
-
Your Home: You can exempt up to $150,000 per married couple
-
Motor Vehicles: You can exempt $6,000 in one or more vehicles
-
Wages: You can exempt up to 25% of your earnings each week
-
Furniture: You can exempt up to $6,000 in furniture & appliances
-
Clothing: You can exempt up to $500 in clothing per person
How does "doubling" work for married couples?
When spouses file for bankruptcy together in Arizona, many of the property
exemptions listed above can be doubled—one important exception to
this being their house. If a specific exemption allows for doubling, each
spouse would be able to claim the full amount of the exemption—which
means that, when combined, they would be able to exempt double the amount
of equity for each of these assets.
Discuss Your Options in a Free Initial Consultation
If you still have questions about the difference between filing individually
and filing with your spouse, we encourage you to schedule a free, no-obligation
consultation with our Phoenix bankruptcy lawyer. Leonard V. Sominsky,
ESQ., PC has been handling bankruptcy cases throughout the state since
2000, so you can count on him to provide the honest, knowledgeable and
professional advice that you need.
We return all calls within 24 to 48 hours! Call today to set up your free
consultation or fill out a
complimentary case evaluation form online.