Separated spouses are legally permitted to file for bankruptcy together. Whether they should, however, is an entirely different question.
Let’s say you’re separated from your husband or wife, and you’re both looking at filing for bankruptcy. You’re allowed to file together in a single case, which may be attractive. You can cut your legal fees, move through the case together, and discharge joint debts completely.
A winning situation overall, right? Not always.
I seldom recommend that a separated couple file for bankruptcy together in spite of the benefits. Why? Because if you’re separated then you are more likely to have a conflict of interest during the case.
When you file for bankruptcy with the former love of your life, you’re putting your future in their hands. They might do something to jeopardize the case; they might refuse to show up for court hearings, transfer property, do something fraudulent, or lie under oath. If that happens, your case may be dismissed or worse even if you didn’t personally do anything wrong.
You could even disagree on the type of bankruptcy to file. You may want to file for Chapter 13 and your spouse may demand on a Chapter 7. That push and pull that led to the marital split in the first place could easily spill over into the bankruptcy case.
Even if you think things are great now, the problems could easily come up later.
Do you really want to entrust your financial future to the same person who has caused you emotional turmoil already? Is it worth the cost savings?
Photo courtesy of Ed Yourdon.
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