When one spouse is drowning in overwhelming debt, the natural question is: does the other spouse have to file too? And if you file together, what does that mean for your household?
Marriage complicates bankruptcy, but not in a way that can’t be navigated. Here’s what you need to know about the joint vs individual filing decision in Arkansas.
The Basic Options
Married couples have three choices:
- Both spouses file a joint bankruptcy: one case, covering both spouses’ debts, assets, and income in a single bankruptcy petition
- Only one spouse files: the filing spouse’s debts are addressed; the non-filing spouse is largely unaffected (with some exceptions)
- Both spouses file separate individual bankruptcies: rare; typically only done when each spouse has distinct, complex financial situations
The bankruptcy process starts before the case is filed, and if both spouses are part of the case, each must complete an approved credit counseling course within 180 days before filing. Filing for bankruptcy also triggers an automatic stay that halts collection activities.
Most married couples either file jointly or have just one spouse file individually. Here’s how to think through which makes sense.
Joint Filing: When It Makes Sense
Joint bankruptcy filings allow both spouses to discharge their debts in a single case, paying one set of filing fees, working with one attorney, and often simplifying the process by filing jointly.
According to Forbes, filing bankruptcy jointly as a married couple can simplify the process and reduce legal fees, but it also means both spouses’ assets and debts are scrutinized. Couples should weigh the benefits of a fresh start together against the risk of exposing more property to the bankruptcy trustee.
Joint filing typically makes sense when:
- Both spouses have significant debt they want discharged through Chapter 7 bankruptcy, a liquidation process that eliminates qualifying unsecured creditors’ claims
- Most of the debt is joint (co-signed loans, joint credit cards, joint medical bills)
- Both spouses want the fresh start at the same time
- One spouse’s income is needed to qualify for Chapter 13, which involves a structured repayment plan lasting three to five years, or joint income affects the means test
How the means test works for joint filers: For Chapter 7, the means test compares your household income, or debtor’s income, to the Arkansas state median income for your household size. Even if only one spouse files, the other spouse’s income still counts as household income on the means test. This is called the “marital adjustment.” Your attorney can help you work through whether combined income pushes you above the median and forces you into Chapter 13.
After filing the bankruptcy petition, couples typically attend a 341 meeting of creditors 21 to 50 days later.
Individual Filing: When One Spouse Files Alone
One spouse can file bankruptcy without the other, and a married person does not have to bring their spouse into the case.
This is common when the debt problem is largely one-sided; one spouse ran up credit card debt, has a business that failed, or has medical bills in their name alone.
In some situations, individual bankruptcy filings may shield certain property from scrutiny compared with putting both spouses into one case.
What happens to the non-filing spouse:
- The non-filing spouse’s credit is generally not directly affected by the filing
- The non-filing spouse remains fully responsible for any debt that is only in their name
- Joint debts are more complicated (see below)
- The bankruptcy trustee will still review the filing spouse’s debtor’s property and financial information even when the other spouse does not file.
The automatic stay and the non-filing spouse: The automatic stay that goes into effect when you file only protects the filing spouse, not the non-filing spouse. So, if you have joint credit card debt and only one spouse files, the creditor can still pursue the non-filing spouse for the entire balance. This is a significant consideration. An attorney helps ensure accurate documentation and complete financial information to avoid costly errors.
What Happens to Joint Debt in Bankruptcy Court When Only One Spouse Files?
This is the question that trips most couples up.
When the filing spouse discharges a joint debt, the discharge only eliminates the debtor’s personal liability. The non-filing spouse still owes the full balance. Creditors can still pursue the non-filing spouse for the entire amount.
Examples:
- Joint credit card with $8,000 balance: Filing spouse’s liability discharged → non-filing spouse still owes $8,000
- Joint car loan: Filing spouse can surrender the car (or reaffirm), but non-filing spouse remains on the hook for the entire balance of the loan
- Joint medical bill: Filing spouse’s portion discharged → non-filing spouse may receive collection calls
This is one of the main reasons couples often choose to file jointly, to get both spouses protected from joint debts at once.
Arkansas Community Property vs. Common Law Property
Arkansas is NOT like community property states. It follows the rules of common law states, meaning:
- Property owned solely in one spouse’s name belongs to that spouse; in common-law states ownership generally follows who purchased the property or whose name it’s in
- Debt incurred solely in one spouse’s name is generally that spouse’s responsibility
- Joint property (held in both names) is subject to the bankruptcy estate when either spouse files
This is different from states like Texas or California where all marital debt may be considered community debt. In Arkansas, the separation between individual and joint debt is clearer, which can work in your favor when only one spouse has significant individual debt.
Protecting the Non-Filing Spouse’s Credit
If the goal is to protect the non-filing spouse’s credit, here’s what matters:
- Individual debts in only the filing spouse’s name: Non-filing spouse’s credit unaffected
- Joint debts discharged in the filing spouse’s bankruptcy: Creditor may report the account as “included in bankruptcy” on the filing spouse’s report, but may continue reporting the debt (unpaid) on the non-filing spouse’s report if they choose to continue pursuing that spouse
- Watch for credit report errors: The bankruptcy notation should not appear on the non-filing spouse’s credit report only
The Means Test When One Spouse Files
Even when only one spouse files, the non-filing spouse’s income typically counts as “household income” for the means test. This is called the marital adjustment.
However, “marital expenses” that the non-filing spouse pays solely for their own benefit can sometimes be deducted from the household income calculation. The math here gets detailed; it’s exactly the kind of analysis your bankruptcy attorney will work through with you.
Additional Considerations: Legal Fees, Child Support, and Security Interests
Bankruptcy protection extends to stopping collection efforts by unsecured creditors, but certain debts like child support and criminal fines are not dischargeable under the bankruptcy code. Secured creditors retain a security interest in debtor’s property, meaning they can repossess or foreclose if payments are not made under a bankruptcy plan or payment plan.
Legal fees for filing bankruptcy are part of the overall cost but can be factored into the process. Your attorney can help you understand these and other living expenses that affect your ability to pay debts.
Which Is Usually the Better Choice?
There’s no universal answer. The decision depends on:
- Whether most debts are joint or individual
- Whether the non-filing spouse’s credit needs to be protected
- Whether combined household income affects means test eligibility
- Whether the non-filing spouse has assets that could complicate the case
- What both spouses’ financial goals are going forward
A conversation with a bankruptcy attorney should cover all of these factors before you decide. Bankruptcy attorneys help protect your assets using exemptions. Arkansas law allows married residents to choose between state and federal bankruptcy exemptions, but married couples in Arkansas cannot mix state and federal exemptions in a joint case. Arkansas also has specific homestead protections influenced by the state constitution.
WH Law Works With Couples Every Day
Filing bankruptcy is a financial decision that affects both people in a marriage, even when only one spouse files, including what happens in and out of bankruptcy court. We’ll walk through your household situation, help you prepare for court requirements and the key steps in the case, and give you a clear picture of which approach makes the most sense for you as a couple.
Schedule a free consultation with WH Law
*This article is for general educational purposes and does not constitute legal advice. Arkansas property law and bankruptcy rules are subject to change. Consult a licensed Arkansas bankruptcy attorney for advice specific to your situation.
