Can a spouse file an individual bankruptcy?

I received an email today from a prospective client asking if a spouse could file bankruptcy without her spouse. Excellent question.

Although both spouses are not required to file bankruptcy jointly, the Bankruptcy Code does require both spouses income to be included in the means test analysis for CMI – current monthly income. However, most people ‘pass’ the means test analysis and can file for Chapter 7 bankruptcy protection. See previous posts for the median income level in Illinois. As for any joint debts between spouses, or family medical debts, the non-filing spouse may still be responsible.

This prospective client also owned real estate joint with her spouse.
As for the home, it would depend on the value of the home, and the balance owed on the mortgage. Each party can exempt $15,000 of equity in Illinois, so unless it has a large amount of equity, then it shouldn’t be effected in a Chapter 7.

Now, if their combined income is too high for chapter 7 or if their home has too much equity, a chapter 13 bankruptcy can help, where she could pay back her bills, sometimes as low as 10 cents on the dollar for unsecured debts, depending on her budget.

Since each case is unique, I encourage consumers to seek an attorney to get a free consultation where the lawyer can examine the case in more detail and provide more specific answers.

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Terrance Leeders

Chicago Bankruptcy Attorney, husband, father, Cubs fan.

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