It is possible for one spouse to file for bankruptcy in New Jersey even if the other does not. In cases where the spouses do not own property together and their assets and debts are generally not commingled, the individual filing of one spouse may not be overly complicated. In other cases, however, one spouse filing for bankruptcy under Chapter 7 or Chapter 13 of the Federal Bankruptcy Code might have ramifications for the other spouse. The facts of the case will determine whether one spouse can file without impacting the other.
One factor that can have a major impact on the decision to file is shared debts. If a married couple has shared debts, it may make more sense to file for joint bankruptcy. If there are shared debts and one spouse secures a discharge, creditors may still go after the other spouse to collect the debts. The other spouse may also see negative marks on his or her credit as the bankruptcy and discharged debts might show up on credit reports.
Shared property is another major factor that can complicate a bankruptcy. Because the bankruptcy trustee is empowered to sell property to satisfy outstanding debts, he or she might order jointly held property to be sold. The spouse who did not file bankruptcy will usually be entitled to half of the proceeds of the sale, but it can be difficult to divide the value of some property.
An attorney who practices bankruptcy law may be able to help couples go through the analysis to determine whether an individual or joint filing makes more sense in a particular case. An attorney may help the parties categorize and organize assets and liabilities or attempt to negotiate settlements with creditors outside of bankruptcy. He or she might also draft and file the necessary legal documents to begin bankruptcy proceedings.