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Can I file for individual bankruptcy if I am married?

| Jul 29, 2020 | Chapter 11 |

Marriage and finances are often a tricky thing, in New Jersey and elsewhere. Some couples keep their money separate and split bills and living costs while other couples integrate their money in joint accounts and pay for everything together.

As the Administrative Office of US Courts explains, if you are considering filing for bankruptcy, you may choose to file individually or jointly. There are, however, several things to keep in mind if you plan to file individually.

Marriage and finances in New Jersey

New Jersey is not a community property state — meaning that it does not view all marital property as shared property but as equitably distributable. This can help the process of bankruptcy by giving you a greater degree of independence from your partner when it comes to your finances.

Additionally, you may own possessions and money independently of your spouse. This is your separate property and includes things like personal gifts and possessions you brought into the marriage from your independent life — so long as you do not integrate them with joint property.

Married couples each have their own credit score, and while you will likely influence one another’s score based on the degree to which you share your finances, credit bureaus still view you as individuals.

Marriage and individual bankruptcy

When you file for bankruptcy, even if you are filing individually, you will need to include, in detail, your spouse’s property, income, expenses, debts and creditors, as it will impact the assessment of your household and expenses when evaluating your bankruptcy claim. This information will become public record on your bankruptcy schedules, although someone would have to seek it out to discover it.

Understanding all of this, know that it is very difficult to file for bankruptcy and avoid impacting the spouse who is not filing. Your claim will likely impact their savings and credit score, but the degree of impact will depend largely on how integrated your finances are.

Planning ahead can help mitigate some of the damage, but the earlier you can separate your finances, the better. Property transferred before a bankruptcy claim is often subject to challenge.