When you are married, you can file Bankruptcy without including your spouse. In fact, when a Bankruptcy is filed jointly with a married couple, they are technically two different bankruptcy cases administered jointly.
When you file a Bankruptcy individually, your spouse’s assets are not included in your filing, unless you have joint debt. In Florida, we have an exemption called Tenants by the Entireties. This exemption says that a married couple’s assets are exempt from the collection of creditors as long as the debts are not owed jointly between spouses. Once a Bankruptcy is filed, the trustee will check to see if the debtors are jointly or individually owed, and either object to the Tenancy by the Entireties exemption or not. There are several factors in determining whether an asset is exempt as Tenants by the Entireties. The main factor is that the property was originally owned jointly by the spouses. For example, if one spouse has a bank account and adds their spouse to that account, that account is not exempt as Tenants by the Entireties. However, if the account was opened jointly at the same time, it would be exempt as Tenants by the Entireties. Another example would be furniture. If you have been married for 30 years, it’s unlikely that the trustee would complain that the furniture was purchased prior to the marriage. Therefore, it would be exempt as Tenants by the Entireties if there was no joint debt. But if you were married six months prior to the filing of the Bankruptcy, it would be your burden to show that the furniture was purchased after you were married. If you were living together prior to getting married and purchased furniture and then got married, that furniture would not be exempt as Tenants by the Entireties. It sounds complicated, but it really isn’t. When you meet with a qualified attorney, all of this can be explained in more detail regarding your specific situation.
When a Bankruptcy is filed, your social security number is used to notify your creditors who you are. Also, the last four digits of your account number are also listed so we properly notify the correct creditors. Because of this, your spouse’s credit report is unaffected. The credit reporting agencies are not notified about your spouse’s social security number. However, if you have a joint account with your spouse, that account will show that the account is in bankruptcy on your spouse’s credit report. To protect your spouse’s credit, you need to make sure that your spouse is not an authorized user on an account or that your spouse is not a joint debtor on the accounts. There are some cases that you will want to file jointly with your spouse. For example, if you have joint IRS debt that is non-dischargeable, and you file individually, your spouse will still be liable for the interest and penalties that you are not required to pay while you are in bankruptcy. This would also be a joint debt, so Tenants by the Entireties would not work in a Chapter 7 Bankruptcy because in a Chapter 7 Bankruptcy, you are not repaying creditors. Therefore, your Tenancy by the Entireties exemption would not be 100% valid. Whatever you jointly owe to the IRS would be carved out of the exemption. Because you are paying the IRS bank in a Chapter 13 Bankruptcy, you would get some of that exemption back. Again, a little complicated, but when you seek information from a qualified Bankruptcy attorney, it will be simplified based on your specific situation.
When a Bankruptcy is filed, the court will want to know the Debtor’s household income. So your attorney will need to get your spouse’s pay stubs for the six months prior to the filing of the Bankruptcy. These pay stubs are not filed with the court. They are only used to calculate the household income. Your spouse is not involved in the Bankruptcy other than the requirement that we show what the household income is. Also, your joint tax returns will be required to be given to the trustee so he/she can review the income and possibly see if there are investments that were not listed on the Bankruptcy schedules. Your spouse name will remain on the returns, but their social security numbers get redacted, as is your social security number, so no one can see the numbers. Also, the returns are sent to a separate email address for the trustee only. Once they review the returns, the returns are destroyed. Your attorney is required to keep a copy of your tax returns and all other documents for five years, but then they get destroyed after that time period. This is a requirement of the United States Bankruptcy Court for the Southern and Middle Districts of Florida. Even if you wanted your file back, the attorney is still required to keep the documents that were submitted to either the Bankruptcy court or the Trustee.
In Florida, there are certain laws that govern ownership of property. For example, if you get engaged and give an engagement ring to your fiancée, the ring is technically still owned by you. You are giving that ring to your fiancée in exchange for a promise that your fiancée will follow through with the promise to get married. Once you get married, ownership of the ring changes to your new spouse. So you cannot claim the ring to be jointly owned as Tenants by the Entireties. Because of this, when you file a Bankruptcy individually, your spouse’s assets remain your spouse’s. You do not have to list your spouse’s assets as your own because legally when you gave your spouse a gift, the gift no longer belongs to you. Also, any other property that is owned by your spouse individually, that does not have to be listed on your individually filed Bankruptcy schedules. So one spouse’s assets are that spouse’s assets. Unless you have joint debt, those assets cannot be touched by your creditors or the Bankruptcy trustee. Your spouse’s assets are protected from attachment in all cases when there is no joint debt.
Bankruptcy is a complicated process which will be made easier to understand when you see a qualified Bankruptcy attorney in Miami. Your specific issues will be discussed and a resolution of those issues will be determined at that time. A lot of people have come to me years after their Bankruptcy, and told me that filing for Bankruptcy was the best decision they have ever made. If you are having financial hardships, call me to set up an appointment to discuss any issues you might be having.
