Can a Married Person File for Bankruptcy Alone?
Marriage and Bankruptcy are complicated and can get more stressful if you are married, as you might worry about how your Bankruptcy might impact your partner. Understanding all your obligations during Bankruptcy and the consequences of becoming bankrupt is crucial.
You might wonder how to proceed with Bankruptcy when you are married as it might have negative consequences on your spouse, or your spouse might be held responsible for some of the debt. Do you both file for Bankruptcy, or can you file for Bankruptcy alone? How would your Bankruptcy affect your spouse?
Filling as an Individual or as a Couple
You might have kept almost all of your finances separate during your marriage. Even though you and your spouse might own joint assets, like rental or home property, only you are the one experiencing debt payment issues.
This is a common problem for a couple facing Bankruptcy. Fortunately, you can file for Bankruptcy as an individual, making your spouse a non-debtor considered the non-filing spouse during the procedure.
Filing For Bankruptcy as an Individual
When you file for Bankruptcy as an individual, the personal insolvency only affects you, not your spouse or family. Filing for Bankruptcy would only discharge your debts, including store cards, student loans, and credit card debts.
After you file for Bankruptcy as an individual, you will be released from most of your debts after three years and one day. Here are the steps you would have to take:
- Include details of your assets (joint assets as well), your income, and your debts to the trustee appointed to you by AFSA after you declare Bankruptcy.
- Your trustee would notify all your creditors about your Bankruptcy, preventing them from contacting you regarding the debt you owe them.
- Your trustee can sell off your assets to pay for your debts, including your home, vehicles, etc.
- After that, you might have to make compulsory payments based on income.
Fortunately, when you file for Bankruptcy as an individual and not a couple, you take the responsibility yourself. This means that the declaration of your Bankruptcy won’t impact your spouse’s credit rating, as well as their income, debts, and personal assets.
However, your non-filing spouse must still provide complete financial details, like their joint assets, joint liabilities, personal assets, and income. This is because they are married to you, and their financial information would offer a better picture of the marriage. It will also help in determining the compulsory repayment amount.
The only ways in which filing as an individual would affect your non-filing spouse is when and if your spouse:
- Is the debt guarantor
- Has joint liability with you
- Is the joint owner of a property with you
What Happens When You Declare Bankruptcy as a Married Couple?
If you and your spouse are filing for Bankruptcy, you must complete all necessary forms and submit them separately. It is essential to remember that financial details included in one Bankruptcy should mirror the ones listed in the other. It is necessary to consult a bankruptcy professional to ensure the process goes smoothly.
Impact of Becoming Bankrupt on Your Marriage or De Facto Relationship
If you are filing for Bankruptcy as an individual, how would it affect your spouse?
Fortunately, your spouse’s credit rating will not be affected, but any property you jointly own will be affected. Your spouse would also not be impacted regarding financial responsibilities, but certain exceptions might exist.
These exceptions might not directly impact your spouse but might put some hindrance or restrictions in the following areas:
Marriage and Bankruptcy: Joint Accounts
This includes open joint accounts and joint loans, like rental leases or home loans in both your names. This would also include both of you jointly having investment accounts in your standing or any joint insurance policies for which you pay the premium.
When you and your spouse enter any contract jointly, you are co-borrowers. This is why your non-filing spouse would also be held responsible legally for the entire amount.
Marriage and Bankruptcy: Loan Applications
When your spouse applies for a loan or a credit, your Bankruptcy won’t preclude them automatically from getting approved. However, it might get difficult for them to get the credit or loan, considering you both share the same address and Bankruptcy has been filed under the same address.
Marriage and Bankruptcy: Family Vacations
Going on family holidays might get challenging as you can’t travel abroad after declaring yourself bankrupt. You also can’t go on a holiday without getting your trustee’s written permission. Depending on your unique situation, you may have to give up your passport until your bankruptcy ends, which is three years and one day from the date your Bankruptcy gets approved.
Wrapping Up: Bankruptcy and the Family
“Before you file for Bankruptcy as a married couple, gather as much information beforehand to help ensure that the best decision is based on what suits you and your spouse.
This is important to note as your Bankruptcy can impact your spouse. There might be other instances where they could be held liable, or you could avoid some aspects of Bankruptcy.
Taking the time to consult a bankruptcy expert is essential, and we can offer you help and advice relating to Marriage and Bankruptcy.”
Andrew Bell Bankruptcy Advisor
With over 30 years of experience in debt solutions and bankruptcy in Australia Andrew can find a solution for you.
“Nothing is more satisfying to me than knowing that I’ve helped someone get back on their feet by guiding them through the Bankruptcy Process. Rest assured, you’re in good hands with me as we solve your financial problems together.”