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Individual vs. Joint Bankruptcy: Key Differences & Which Is Right for You
Filing for bankruptcy is a major financial decision, and one of the first questions married couples face is whether to file individually or jointly. Each option has distinct advantages and implications, depending on your financial situation.
In this guide, we’ll break down the differences between individual and joint bankruptcy, helping you determine the best path forward.
Individual Bankruptcy: When Should You File Alone?
Individual bankruptcy is filed by one spouse, leaving the other’s credit and assets unaffected (unless jointly owned). This may be the right choice if:
- Only one spouse has significant debt (e.g., medical bills, credit cards, or personal loans).
- The other spouse has strong credit and wants to preserve it.
- Debts are not jointly held, meaning creditors can’t pursue the non-filing spouse.
However, if most debts are shared, filing alone may not fully resolve financial pressures.
Joint Bankruptcy: A Unified Approach for Married Couples
Married couples can file a joint bankruptcy petition, combining their debts and assets into a single case. Benefits include:
- Lower filing fees (one case instead of two).
- Streamlined process—only one hearing and paperwork submission.
- Protection for both spouses from creditors on joint debts.
Joint bankruptcy is often ideal when:
✔ Both spouses have substantial debt.
✔ Most liabilities are jointly held (e.g., mortgages, car loans, or co-signed debts).
✔ A fresh financial start is needed for the entire household.
Key Considerations Before Choosing
- Impact on Credit Scores – Joint filing affects both spouses’ credit reports.
- Asset Protection – Some states allow exemptions for jointly owned property.
- Eligibility Requirements – Both spouses must meet the same bankruptcy chapter criteria (e.g., Chapter 7 or 13).
Which Bankruptcy Chapter Applies?
- Chapter 7 – Liquidates eligible debts quickly; best for those with limited income.
- Chapter 13 – Restructures debt into a 3-5 year repayment plan.
A bankruptcy attorney can help determine whether individual or joint filing aligns with your financial goals.
Need Help Deciding? Consult a Bankruptcy Lawyer
At LegalSage, we help individuals and couples navigate bankruptcy with confidence. Schedule a consultation to explore your best options for debt relief.
