A common question which comes across our phone lines is whether a joint or single bankruptcy petition should be filed between a married couple.
Prior to making this decision a debtor should be keenly aware of the two types of Marital Property ownership: 1) Community Property and 2) Common Law (also known as equitable distribution). Most states apply common law property ownership. In the United States, only nine states are community property states (Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Washington and Wisconsin). A Los Angeles bankruptcy would apply California’s community property principles. As such, each spouse equally owns all property earned and received during marriage. Likewise, the community is liable for all debts incurred by either spouse during marriage. Thus, in simple terms, if your spouse charges $20,000 in credit card debt in his or her own name, you guessed it, you are still responsible for half of the debt (50/50). Hence, in the majority of situations, because of the joint debts incurred during marriage, filing jointly makes the most sense.
As always, prior to making a decision as to whether or not a single or joint bankruptcy petition should be filed, consult with an experienced Chapter 7 or Chapter 13 bankruptcy attorney at Sky Law Group today!
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