Can a Wife File Chapter 7 With a Husband If All the Debt Is in the Husband's Name?

by Kelly Mroz

In a Chapter 7 bankruptcy, assets are sold to pay the debtor's obligations and eligible debts that are not satisfied by the liquidation are discharged, meaning the debtor is no longer obligated to pay them. If a debtor has a wife, he can file for Chapter 7 individually or together with his spouse. The wife is always allowed to file together with the husband; however, she must consider whether there is any benefit to her if she joins in the filing. If the debt is all in her husband's name, the wife would not get any benefit from filing for bankruptcy with him; she has no debts, so there is nothing for the bankruptcy court to discharge.

Eligibility

When a debtor is married, eligibility for Chapter 7 bankruptcy is evaluated by a means test that considers the income and assets of both spouses, even if only one spouse is filing. Therefore, if a husband is eligible to file for Chapter 7, his wife is eligible to file jointly with him, even if she has no debt whatsoever. If she files, however, the bankruptcy negatively affects her future borrowing power because it is reported on her credit file, so careful evaluation must be made to determine whether her joint filing is justified. If she has minimal to no debt, the harm she suffers from the bankruptcy outweighs the benefits of filing.

Co-Signer

The wife should check to make sure her husband's debt really is just in his name. If she signed a credit card application or other contract with the lender when the debt was incurred, she is a co-signer. A co-signer is liable for the whole debt if the primary debtor doesn't pay. It is easy to forget one signature scrawled on a credit application years ago, so the wife should contact each lender to confirm the nature of her obligations.

Authorized User

Credit cards also permit authorized users. If the husband signed up for a credit card and listed his wife as someone who was allowed to use his credit account to make charges, she received her own card but is only an authorized user. As an authorized user, she never entered into any contractual relationship with the lender, so she is not liable for the debt. She does not need a bankruptcy discharge in this situation because she doesn't owe the lender anything.

Community Property

In the nine states with community property laws, most debt incurred during the marriage is considered community debt. Both spouses are obligated, regardless of who entered into the contract for the debt. If only the husband pursues bankruptcy, his obligation on those debts is discharged, but his wife is still liable. Thus, when the debt is community debt, the wife should join the bankruptcy action to have her connection to those community debts severed.