Bankruptcy is all about asking questions and making decisions. Should you file or not? Which chapter would be your best choice? If your spouse chooses to file for bankruptcy, does that mean you have to as well? Since Texas is a community property state, is it even possible for a spouse to file for bankruptcy alone? Without a bankruptcy attorney to guide you, these questions can get very confusing very fast.
That’s why Davis, Ermis and Roberts, LLC, is committed to helping Texans navigate the tricky course of bankruptcy. Our talented legal team has been assisting with bankruptcy filings for many years, and we know how to get it done right. You don’t have to go through bankruptcy alone. Call us today for a free consultation.
Bankruptcy in Texas
Texas is a community property state. That means all assets acquired as a couple are owned jointly by the couple, and must be divided in the event of divorce. Assets that count as separate property, such as one spouse’s earnings prior to the marriage, or an inheritance from a relative, are not shared between the partners.
Community property does not apply to bankruptcy filings. In Texas, you have the choice of filing for bankruptcy as an individual, even if you’re married at the time. You may also choose to file jointly with your spouse. Additionally, the two of you may file simultaneously as separate individuals. There are circumstances where one filing strategy could be more beneficial than the others. An experienced bankruptcy attorney can advise you in this matter.
Filing Separately in Texas
When you file for an individual bankruptcy while married in Texas, more property will be at risk than in non-community property states. That’s because all community property that isn’t exempted could possibly be seized to settle your debts. Your number of exemptions is limited, but filing jointly gives you twice the number of exemptions. This could allow you to keep more of your assets.
What About Joint Debt?
Debt is a little more complicated when filing for bankruptcy separately. If one spouse files independently, their individual accounts, as well as their joint accounts, are dischargeable. The filing spouse’s separate property and jointly-owned property and accounts are off limits to collectors once the debt is discharged. However, the non-filing spouse’s separate property is not dischargeable, and could be seized.
When is Filing Separately a Good Idea?
If only one spouse has substantial debt and the spouses don’t have much community property, it could be advantageous for the indebted spouse to file for bankruptcy as an individual. The spouse without the accrued debt can avoid filing in Texas and keep their assets safe. Separate filing is also a good option when the parties have separated pending a divorce.
If one of the spouses has filed for Chapter 7 bankruptcy in the past 8 years, or Chapter 13 in the past 6 years, they may not be eligible to file again. An appropriate amount of time needs to pass before they can file for bankruptcy again. Joint filing would not be an option in this case, so one spouse would need to file as a separate individual.
Call Ermis, Davis and Roberts, LLC: Your DFW Bankruptcy Experts
Our legal team has specialized in Texas bankruptcy law for years. We have the knowledge and experience to walk you through every step of the process. We make sure you have all the proper documentation and paperwork, you’re always on time to your court hearings, and that your testimony under oath never contradicts itself. When you’re considering bankruptcy, you need Ermis, Davis and Roberts at your side! Call us today for a free consultation.