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Will Bankruptcy Affect My Spouse?

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Will Bankruptcy Affect My Spouse?

If you’re concerned about the potential impact of bankruptcy on your spouse, you’re not alone. This is one of the top questions married people have about filing for bankruptcy in Indiana.


First, you should know that choosing bankruptcy is a smart, proactive way of lifting the burden of overwhelming debt. Here in the Hoosier state, more than 15,000 people file for bankruptcy in an average year, with about 58% choosing Chapter 7 and 41% choosing Chapter 13 bankruptcy.

To understand the potential impact on you and your spouse, it helps to have the facts about state and federal bankruptcy laws. Below, the bankruptcy team at Sawin & Shea answers common questions including, “Will bankruptcy affect my spouse?” about Indiana bankruptcy for married spouses.

Can You File Bankruptcy Without Your Spouse?

Your biggest question is likely, “Can one spouse file bankruptcy without including the other?” Yes, this is legal and a viable option. If you’re the one with the debt, it could be better for you to file alone and work to discharge your debt through the bankruptcy process with minimal involvement from your spouse.

However, your spouse may still be involved in terms of allowing their tax and financial information to become part of the process. Household financial disclosures are a required part of bankruptcy under the U.S. Bankruptcy Code. However, the non-filing spouse’s name or other identifying information will not appear in the case. 

The bankruptcy court will examine your joint and individual debts and assets. Follow your bankruptcy lawyer’s instructions about quickly and truthfully providing tax information, bank records, property transactions, and other documentation that may either apply to you and your spouse jointly or you alone. 

Is it Possible to File Bankruptcy Without Telling Your Spouse?

Wondering if you have to tell your spouse about the bankruptcy? It would be challenging to make it through the entire bankruptcy process without them finding out. Chapter 7 bankruptcy relies on passing an income test to determine the details of your bankruptcy plan, so your spouse needs to provide income information such as paystubs for that part of the process even if they aren’t part of the bankruptcy itself.

There are also many other ways for a spouse to find out about your bankruptcy, like when documents arrive in the mail. Your bankruptcy may erroneously show up on your spouse’s credit report in the future.

Honesty is the best policy, so work with your bankruptcy lawyer to make a plan regarding your spouse’s level of knowledge and involvement in the process.

How Does Bankruptcy Affect Spouses Who Aren’t Filing?

If you’re wondering, “Will bankruptcy affect my spouse?” the answer is yes, but it doesn’t have to cause a major disruption in their life or finances. You can minimize the impact on your spouse by working with a bankruptcy lawyer who is aware of your situation and who understands your needs.

While your spouse can remain mostly removed from the process, there’s also a downside to leaving them out. Their debts will be unaffected if they aren’t part of the bankruptcy at all. These debts would remain after the process concludes, so it’s worth considering whether it’s better to file for bankruptcy together or alone. There is no minimum or maximum value of debt required to file for bankruptcy in Indiana, so the total amount doesn’t matter.

Imagine a scenario where Spouse 1 has no debt except student loan debt, which is rarely dischargeable in bankruptcy. Spouse 2 holds extensive medical and credit card debt, which are two of the most commonly-discharged forms of debt. In this situation, it could be best for Spouse 2 to file alone and leave Spouse 1 out of the process.

In another scenario, imagine that Spouse 1 and Spouse 2 each have a huge amount of medical debt and credit card debt. Creditors are hounding both spouses for payments, and this is unlikely to stop if just one spouse files for bankruptcy. The creditors will only ramp up their efforts to go after the remaining spouse, so filing together could be the best approach in this situation.

In the future, you and your spouse will still be able to apply for joint loans and credit accounts regardless of whether you file for bankruptcy together or alone. Most people see their credit scores improve significantly after the initial bankruptcy period, so the future could look much brighter after this relatively short time in your life.

Questions About Bankruptcy With Your Spouse? We Can Help.

If you still have questions about how bankruptcy could impact your spouse, please reach out to the experienced team at Sawin & Shea. We offer a free video consultation so it’s easy to clear up your concerns and start the road to financial recovery.

Sawin & Shea — Indianapolis Bankruptcy Attorneys

Filing for bankruptcy is not the end. It’s the beginning of a new financial life for you. The Indiana bankruptcy attorneys at Sawin & Shea can help you get rid of overwhelming debt and advise you on life after bankruptcy. We are here for you during this life-changing process. 
Please do not hesitate to call us today at (317) 759-1483 or send an email for a free consultation. We are ready to help.

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