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.

Get a free, confidential bankruptcy evaluation. Learn More

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.

Get a free, confidential bankruptcy evaluation. Learn More
Can a Wife File Chapter 13 if a Husband's Case Was Dismissed?
 

References

Related articles

Can You Include Returned Checks in Chapter 7?

When a debtor files for Chapter 7 bankruptcy, he must inform the court of all of his liabilities, including returned checks. Returned checks represent the debtor's unpaid debts. As such, they are dischargeable in bankruptcy, unless the creditor can prove fraud on the debtor's part.

Can One Party in a Marriage File Bankruptcy?

In most respects, marriage legally joins two people at the hip, but this is not always the case when it comes to financial obligations. No law exists that says your spouse must join you if you decide to file for bankruptcy. There may be some downsides to going it alone, however.

How to List Your Spouse in a Bankruptcy to Discharge Community Debt

For spouses who live in community property states, most property and debts acquired during the marriage are considered under the joint ownership and responsibility of both spouses. So unless you list your spouse as a co-debtor on the bankruptcy petition, she will likely remain on the hook for your shared debts, even if your individual responsibility for them was discharged by the bankruptcy.

Bankruptcy

Related articles

How Does Bankruptcy Affect Spouses?

Bankruptcy may be your path away from overwhelming debt and can give you a fresh start. If you are married, your spouse ...

California Laws on Community Property in a Bankruptcy

California is one of only nine community property states in the U.S. Married spouses who live in those state shares ...

What Can I Keep if My Husband Files Bankruptcy but I Don't?

Sometimes, married couples face financial obstacles that feel impossible to overcome, inhibiting their ability to ...

Can Someone in Chapter 13 Bankruptcy Get a Passport?

Debtors file for chapter 13 bankruptcy to obtain a fresh financial start by reorganizing and repaying their debts. ...

Browse by category
Ready to Begin? GET STARTED