Compared to single people, debtors looking to file for bankruptcy while they’re married have additional issues to consider — whether they should file jointly with their spouse, or just by themselves? People who live in California and New Mexico, where community property laws apply, adds some additional wrinkles to the calculus.

Good Intentions

Occasionally, an individual debtor who is married tells me her credit card debts are hers alone and that she wishes to file for bankruptcy without any involvement of her husband. This is well-intentioned, but it’s difficult to file without at least the non-filing spouse being on board with the process. This is because filing for bankruptcy requires information about the property owned by the community, the income of both spouses, along with any community debt (debt acquired during the marriage is presumed community.)

Community Property

Schedule A requires the person filing to list property they own in addition to community property. This can include income and property acquired during the marriage. If a trustee believes an omission of community property was made while examining the filed petition, it may lead them to continually dig further to see what else is missing or what else might be incorrect. In our hypothetical example, even if a car was titled to the husband alone because it was acquired during the marriage, the car is presumably community property. Property that the community owns can also impact how the exemptions are used or if there are enough exemptions left to protect the property from being liquidated by the trustee.

Marital Income For the Purposes of the Means Test

Income determines eligibility for filing for Chapter 7 bankruptcy, and this calculation includes marital income. An individual alone can easily fall under the threshold for filing based on their six-month average income, but once the spouse’s income is factored in, it can knock them out of eligibility. This is most common when the non-filing spouse earns significantly more. Newly married couples where this is the case can cause an individual filing to either eek under the threshold (making them still eligible) or go over simply because they were married for a few months too long.

There’s certainly much to consider when filing for bankruptcy, especially if your spouse has to be involved indirectly. In my experience, it’s best to be transparent with your spouse and that you are both on board with the decision to file for bankruptcy, and to talk through the scenarios and impact of bankruptcy.

William Ha is an attorney serving Los Angeles and Orange Counties in California, and Cibola and Bernalillo County in New Mexico.

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