QUESTION
Can my wife file for bankruptcy even though we file a joint income tax return?
Asked on Feb 23rd, 2013 on Bankruptcy - Maryland
More details to this question:
I earn all the household income but she has a debt in her name alone of over $200K. The debt stems from a home loan where she received a no doc loan and she was the only one on the loan. She walked away from the house and the 2nd mortgage company obtained a judgment because the house value dropped 50%. She has no assets or income for the creditor to collect from. Can she seek bankruptcy protection? We file joint income tax return but i earn all the income. The debt/ judgment is my wife's only. Thank you.
1 ANSWER
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One spouse can file bankruptcy by herself. In the means test which reviews the debtor's previous 6 month's gross income, she will state she is filing individually, but married and living together. The petition will reflect your income as part of the household income and your expenses. It may be that the total household income could preclude her filing a chapter 7. In that event, her only bankruptcy recourse is a chapter 13 in which she makes plan payments. The amount is determined by the means test and the actual disposable household income.
Answered on Feb 23rd, 2013 at 4:24 PM