As a legal process, bankruptcy is a way of asking for relief from debts. Although bankruptcy involves court orders and proceedings, it’s usually something the debtor seeks out. In the United States, bankruptcy cases are handled in federal courts.
Considerations When Filing
There are a lot of issues that come up when it comes to filing for bankruptcy. For married couples, it’s possible to file for bankruptcy jointly or as individuals. The decision about how to proceed often depends on how and when the people in the marriage acquired their property. In community property states, anything acquired during the marriage belongs to both parties. In the court’s eyes, there are actually three parties involved in such marriages: you, your spouse and “the community.”
There are some exceptions to this. For example, if you inherit property specifically in your name during the marriage, it’s yours. It doesn’t belong to the community, and your spouse has no claim on it. Property you owned before getting married also remains yours alone. Indiana is not officially a community property state. However, courts will tend to perceive marital assets that way and usually divide them 50-50 when the issue arises.
If you file for bankruptcy as an individual, only your share of assets as defined by the state will be liquidated to pay creditors. Creditors typically cannot seek assets owned by your spouse or their share of the community property.
Getting a Professional Involved
Filing for bankruptcy is complicated, so it may be valuable to have an attorney with experience bankruptcy law to advise you during the process. There can be advantages to filing as an individual or as a couple depending on the specific situation. Getting professional advice may be the best way to proceed.