Chapter 7

• Chapter 7 bankruptcy involves the liquidation of the petitioner's non-exempt assets in order to pay off his debts. Married couples may file a joint Chapter 7 petition, separate petitions or one spouse may file a Chapter 7 petition while the other spouse does not file for bankruptcy. If only one spouse files for Chapter 7 bankruptcy, both spouses are required to provide the court with a list of all creditors and amounts owed. Both spouses must reveal all sources of income including amount and frequency of payments. Both spouses must list all of their individual and joint property. Both spouses must provide the court with a detailed list of their regular monthly living expenses. The court has to know the income and expenses of both spouses in order to evaluate the financial position of household.
  
  

Chapter 7 Considerations

• One spouse may file for Chapter 7 bankruptcy while the other spouse does not file, but there may be consequences for the non-filing spouse. If the couple has joint debts, which the filing spouse includes in his bankruptcy, the creditors may still pursue collection activities against the non-filing spouse. The filing spouse may not include any debts that are solely in the non-filing spouse's name. Married couples who live in community property states are usually considered to be co-owners of all assets and debts acquired after the marriage, regardless of which spouse signed the credit agreement.
  
  

Chapter 13

• Chapter 13 bankruptcy allows the debtor to maintain possession of her assets while participating in a court-approved repayment plan. Married couples may file a joint Chapter 13 petition, separate petitions or one spouse may file for Chapter 13 protection while the other spouse does not file. Regardless of whether the couple files a joint petition or if only one spouse files for Chapter 13, both spouses must provide the court with a list of all creditors and amounts owed, all sources of income including amount and frequency of payments, all individual and joint property and a detailed list of their regular monthly living expenses.
  
  

Chapter 13 Considerations

• Chapter 13 provides the petitioner with an automatic stay, which prevents his creditors from pursuing any collection activities as long as the stay is in effect. Chapter 13 bankruptcy extends the automatic stay provision to any co-debtors, such as a spouse. Creditors are prevented from pursuing collection activities of consumer debt incurred primarily for family, household or individual purposes, unless specifically authorized to do so by the bankruptcy court. The non-filing spouse may still be liable for any outstanding balances that remain on consumer debt after the filing spouse's bankruptcy has been discharged.