One spouse may file for bankruptcy individually without the participation of the other spouse in Tennessee. The important question, however, is whether it is advisable. There are pros and cons to having one spouse only file for bankruptcy, depending on their unique circumstances.
It is often not advisable unless the non-filing spouse has little or no debt. One spouse filing for bankruptcy would eliminate only the debt for which the spouse who files a bankruptcy petition is liable. The debt of their non-filing spouse would not be affected. It would remain the obligation of the non-filing spouse to pay their own remaining debt.
Bankruptcy is the legal process in which a person’s debts are discharged, making the debtor no longer liable to pay off the debts. Or, the debtor makes a plan in bankruptcy court to pay off their debt according to a plan that is affordable for them.
If only one spouse in a marriage owes debt, only that partner should file for bankruptcy. Debts for which both spouses are jointly liable for payment would remain the liability of the spouse who has not filed for bankruptcy, even if the other spouse has completed bankruptcy. This could be a result that neither spouse wants.
Another consideration is the automatic stay in bankruptcy. When a person files a petition for bankruptcy in a bankruptcy court, it acts as an immediate automatic stay. This means that most actions designed to collect debts taken by a creditor, collection agency or government agency against the debtor are automatically stopped. Most types of wage garnishment are also stopped by the filing of a petition for bankruptcy.
Debt collectors must cease their efforts to get the debtor to pay their debts. However, if only one spouse files, then only the creditors to whom that spouse owes money would be stopped by the automatic stay.
If the other spouse is also behind in payment of their debts, debt that is not included in the filing spouse’s bankruptcy petition, the collection efforts of the non-filing spouse’s creditors could continue.
Of course, federal debt collection laws, e.g., the federal Fair Debt Collections Practices Act, would still protect the spouse who has not joined in filing for bankruptcy, if they have their own overdue debts, from prohibited debt collection conduct. However, not all contact would be forbidden.
So, if one spouse wants to file for bankruptcy, an important first step would be to determine whether their debts are the joint liability of both spouses or solely the liability of one spouse.
Tennessee does not follow community property law, which would essentially dictate that all debt incurred during the marriage is jointly the debt of both spouses. Tennessee also does not recognize common law marriage, so joint ownership of property or joint liability for debt on the basis of a common law marriage would not be an issue in Tennessee.
A person who is not married, even if they think they have a common law marriage, would file individually for bankruptcy just as any unmarried individual would.
In Tennessee, the spouse who wants to declare bankruptcy alone would have to determine which debt is their debt, which is the debt of the non-filing spouse and which is the joint responsibility of both of them.
In addition, the property that the spouses own jointly would have to be listed on a bankruptcy petition or that the spouse filing for bankruptcy owns as their sole property would have to be listed on the petition and might be sold to pay off the debt of the spouse who files.
One important issue is whether one spouse who wants to file for bankruptcy qualifies for it. An individual must meet the eligibility requirements, which are different depending on the type of bankruptcy one chooses to file.
For Chapter 7 bankruptcy, a person must pass a means test. Their income must be low enough to qualify. The test assesses how a person’s average income in the last 6 months compares to the median income in Tennessee. If a person’s income is below the median income in Tennessee, they may be able to file for Chapter 7 bankruptcy.
In order to qualify for Chapter 13 bankruptcy, a person must also meet income requirements. A person needs a regular income that would support a plan to repay their debt for a specified period of time, usually for 3 to 5 years. Additionally, there are limits to the amount of debt a person can have to qualify for Chapter 13.
In addition, a person must have attended credit counseling within the 180 days before they file their petition for bankruptcy. In counseling, among other things, a person would learn about alternatives to bankruptcy. A person must also have lived in Tennessee for at least 91 days before they file.
It can be advantageous for only one spouse to file for bankruptcy in some situations. The credit score of the spouse who does not file would not be affected by the bankruptcy of their spouse.
This would be especially beneficial if the non-filing spouse has a strong credit history that they want to preserve. Their better credit history could enable the non-filing spouse to access credit that would not be available to the spouse who has declared bankruptcy.
However, the credit rating of the spouse who does file for bankruptcy will undoubtedly worsen, possibly by as much as 100 to 200 points. If one spouse’s bankruptcy affects that spouse’s credit rating, it could affect the couple’s ability to get a mortgage in both of their names in order to purchase a home.
As can be seen, a married person who is thinking that filing for bankruptcy without their spouse should have a Tennessee lawyer consultation. Their lawyer can help the couple create a complete inventory of their assets and debts and who owns or is responsible for each item. Their Tennessee lawyer would be able to help a couple decide if filing for bankruptcy by one of them would provide the solution they need to any debt problem they have.
