“But at the beginning of creation God made them male and female. For this reason a man will leave his father and mother and be united to his wife, and the two shall become one flesh. So they are no longer two, but one flesh. Therefore what God has joined together, let no one separate.” Mark 10:6-9
A strict interpretation of the above quote about marriage from the Bible is that when two individuals become married, they literally become one. Well, not according to the credit reporting agencies.
Even after marriage, each individual has their own separate credit report that is wholly independent from their spouse’s. One of the many reasons this is important is that, often times, it makes a lot of sense for only one spouse to file for bankruptcy. When I recommend this to a potential client at Steidl & Steinberg, I often get the question, “Well, if I file, won’t my spouse’s credit be affected?” Generally, the answer to that question is “no.”
The fact that your individual credit report has nothing to do with your spouse is the major reason why. A bankruptcy will show up on your credit report for anywhere from seven to 10 years depending on the type of bankruptcy filed. If you file without your spouse, it will not show up on their credit report and their credit will not be affected.
Why should only one file bankruptcy?
You might be wondering, why would someone file a bankruptcy without their spouse? There are a lot of answers to this question, and everyone’s situation is different. However, one of the most common reasons to that question (as simple as it sounds) is that only one spouse has overwhelming debt.
Let’s take this hypothetical case. A couple was recently married. The husband had about $40,000.00 in credit card debt and the wife only had $500.00 in credit card debt. The husband essentially brought his debt into the marriage. My advice would be for the husband to file an individual bankruptcy to handle his debt, and that the wife stay out of it. This is legal and permissible, and doing it this way meant there would be no effect on the wife’s perfect credit.
Again, that is just one example of when it would make sense for only one spouse to file without the other. There is an almost infinite list of other possible scenarios in which that course of action would be in the couple’s best interests. The important part is that the non-filing spouse retains their credit without a bankruptcy filing showing up on their credit report.
Be careful though! There are always exceptions to the rule, and there are exceptions to this as well. Jointly held debt and jointly held assets by spouses can be effected if only one spouse files for bankruptcy, even though their actual credit score may not be. The list of times that this can be the case is far too extensive to list here. The best thing is for your lawyer to advise you as to whether it makes sense to file a joint case or for only one spouse to file. Your lawyer should know the advantages and disadvantages of either path.
As always, any of the lawyers at Steidl & Steinberg would be more than happy to answer any questions that you, or your spouse, may have regarding the effects of a bankruptcy for a married couple.