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Spouse Declares Bankruptcy In Georgia

Spouse Filing Bankruptcy

What Happens When a Spouse Declares Bankruptcy in Georgia?

At Burrow & Associates, one of the questions clients frequently ask our bankruptcy team relates to married couples and filing for bankruptcy. The couples want to know what will happen if only one of them file for bankruptcy. Will it impact the other spouse? In today’s blog, we’re taking a look at what happens when a spouse declares bankruptcy in Georgia.


Can One Spouse Declare Bankruptcy in Georgia?

Yes, married couples can file for bankruptcy jointly or separately. Typically, individuals will file either a Chapter 7 or a Chapter 13 bankruptcy in Georgia. When an individual declares bankruptcy separately from their spouse, they are not a co-debtor on any of the debts, they will not be listed on the petition. If the non-filing spouse is a co-debtor on any of the filing spouse’s debt, the non-filing spouse’s name and address will need to be listed in the bankruptcy petition. However, with both a Chapter 7 and Chapter 13 filing, the individual will need to disclose all household income, including the spouse’s income.


The Benefits of One Spouse Declaring Bankruptcy in Georgia

Whether to file a Chapter 7 or Chapter 13 bankruptcy jointly or separately depends on a variety of financial factors. An experienced bankruptcy attorney can walk you through all of the options so that you and your spouse can select the best choice for your family.

Filing separately does have a few benefits. To begin, if only one person is responsible for the debt (ex: credit card bills, school loans, domestic support obligations), filing individually may protect the other spouse’s assets from being liquidated. Also, filing for bankruptcy separately can help protect the other spouse’s credit score. This way, your household can still retain a certain level of credit and buying power.


How One Spouse Declaring Bankruptcy in Georgia May Impact the Other Spouse

Filing for bankruptcy as an individual can be beneficial if only one of the spouses has personal debt. The filing will only be under one name and social security number. But if the couple is jointly responsible for any debt, both spouses may be impacted by filing for bankruptcy. When a spouse files for bankruptcy, it eliminates their personal liability for any debts discharged in the bankruptcy case. It does not eliminate the non-filing spouse’s obligation to repay their portion of those joint debts. If the non-filing spouse falls behind on payments, creditors can still come after the non-filing spouse to collect any joint debts. Filing individually can also affect the other spouse’s credit report if there are any joint debts. The bankruptcy can appear on the other’s spouse’s credit report with respect to the joint debts, and if he or she fails to pay any of their obligations, their credit score could be negatively impacted.


Married Couple Separates, Spouse Declares Bankruptcy in Georgia

Filing for Chapter 7 or Chapter 13 bankruptcy can help alleviate the stress of certain financial obligations. But under Georgia law, support and maintenance obligations (ex: alimony, child support) are not dischargeable in bankruptcy. So, for example, let’s say a couple owns a home together, they divorce, and when the husband files for bankruptcy, he is able to discharge his mortgage debt. The ex-wife is now financially responsible for the home. The party that is living in the home must continue to make the payments if he/she wants to stay in the home.  If no one pays the mortgage payment, regardless of who files, the mortgage company will foreclose on the home.

While the ex-husband is no longer responsible for making the mortgage payments, he may still be obligated to pay alimony to his wife, which could include the cost of maintaining their marital home. In other words, the spouse may be able to discharge some debts in bankruptcy (ex: mortgage), but under Bankruptcy law, the spouse cannot discharge support obligations (ex: alimony). If an individual is considering divorce and their spouse also wants to file for bankruptcy, it is a good idea to consult an attorney about how bankruptcy could affect the divorce settlement.


Have Additional Questions? Contact the Bankruptcy Team at Burrow & Associates

If you are considering bankruptcy and would like to know whether you should file individually or jointly with your spouse, please reach out to our bankruptcy team. We can answer any questions you have and help determine the best course of action for you and your family. You can reach us at (678) 323-2394 or via our website to set up a free consultation.

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