About Joint Bankruptcy

• During joint bankruptcy, two individuals file bankruptcy together on their joint and individual debts. Joint bankruptcies are advantageous when both filers owe the same debt. If only one individual files bankruptcy on a joint debt, the creditor can still collect from the cosigner. However, if both debtors file bankruptcy, the bankruptcy's automatic stay protects both individuals from collection. Most joint bankruptcies involve only one filing fee and one attorney fee. At the time of publication, joint bankruptcy is only available to married couples.
  
  

Bankruptcy After Separation

• Because legally separated spouses are still married under the law, they can file joint bankruptcy. The joint bankruptcy of a separated couple proceeds in the same way as the joint bankruptcy of any other married couple. You can include your individual and joint debts, and all of your nonexempt marital property is available to the trustee. You can even file for divorce during the bankruptcy.
  
  

Bankruptcy During Divorce

• As long as you are still legally married, you can file for bankruptcy during divorce proceedings. You can also finalize your divorce during the bankruptcy. However, if only one spouse files for bankruptcy during divorce proceedings, it may affect the debt and property each spouse receives. If the filing spouse files bankruptcy on joint debts, creditors can collect from the other spouse. If the filing spouse files Chapter 7, all nonexempt marital property is subject to seizure by the bankruptcy trustee, even if it is in the possession of the nonfiling spouse.
  
  

Considerations

• Once your divorce is final, you can't file joint bankruptcy with your ex-spouse. If you file bankruptcy, you must file individually. After your divorce, you are still legally responsible for all debts that bear your name, even if the court ordered your spouse to pay them. If your spouse files bankruptcy on a joint debt he was ordered to pay, the creditor will still try to collect from you. In such cases, it may be beneficial for you and your spouse to file separate bankruptcies at the same time. If a creditor collects a joint debt from you that the court ordered your spouse to pay, you can typically collect reimbursement from your spouse.