In Indiana, you do not have to file for bankruptcy with your spouse if you are married. You can file a personal bankruptcy, but there are several things to consider first. In this article, the Dansville, Indiana bankruptcy attorney, Chris Arrington, will discuss factors to consider when you file for bankruptcy and are married in Indiana. 

Indiana is not a community property state

One of the main factors that will influence whether or not you should file for bankruptcy as a couple or individually is the laws regarding marital property and marital estate. Some states are community property states. In these states, any money that is brought into the marriage and the assets purchased with that money are considered property of the marital estate. This includes debts as well. It does not matter who earns more. Both spouses’ incomes and assets are collectively considered part of the marital estate. Hence, the term “community property.” 

Indiana is not a community property state. In Indiana, each spouse only becomes responsible for their partner’s debts if they voluntarily consent, such as cosigning on a loan. This means that in Indiana, one spouse could file for bankruptcy to eliminate their individual debt. 

You can file for bankruptcy individually in Indiana

In Indiana, a spouse can declare bankruptcy without including their spouse in the bankruptcy. It’s important to note, however, that debts considered “marital debt,” or those incurred together, would not be discharged as part of the bankruptcy proceeding. Instead, the debt would remain the liability of both spouses. In many cases, it will be in your best interests to file bankruptcy together. 

During a bankruptcy proceeding, you can exempt certain properties from Chapter 7 liquidation. These exemptions are established at the state level. When a couple files jointly, they can double their exemptions. This includes protecting equity in the family home, your personal vehicles, and more. In these cases, it might be best for both parties to declare bankruptcy together. 

In other cases, particularly in cases where one spouse has a lot of non-dischargeable debt, having one spouse declare bankruptcy would probably be preferable to having both spouses declare bankruptcy together. 

Regardless of whether you file together or separately, you will still need to provide your spouse’s information on the bankruptcy petition, even though they’re not filing with you. This information will be included in your disclosure statement. It will include your spouse’s income, debts, assets, and expenses so that the court has a complete picture of your household finances. 

Ultimately, you will want to present your finances to an Indiana bankruptcy attorney who can best advise you on the proper course of action. Whether or not you should file together or separately depends heavily on your situation.

Talk to a Danville, IN, Bankruptcy Lawyer Today

Chris Arrington represents the interests of those who are considering filing for bankruptcy. Whether or not you want to file as a couple or individually will depend on factors that a bankruptcy attorney can help you sort out. Call our office today to schedule an appointment, and we can begin discussing your next steps right away.