Q: I am considering filing chapter 7 bankruptcy. Do I have to file with my wife, or can I file by myself?
We live in WA state. Debt is personal loans and credit cards. The personal loans are in my name alone. I am the owner of the credit cards, but my wife is a co-borrower. She has no income and has had no income for over 8 years. Would I have to file bankruptcy with her? If I file alone, could creditors come after her because she is co-borrower? How would they come after her as she has no income? Would the credit card debt be discharged if I file alone? I tried to remove my spouse as co-borrower on the cards, but the bank said NO, citing my income is insufficient. Our house is exempt based on low equity. Our car is payed off and exempt based on low value. We have no other luxury possessions that could be auctioned and collected upon. Household size is 5, annual gross income roughly 50k. Total debt is 48k (38k personal loans, 10k credit cards).
A:
You can file for bankruptcy relief singly (her income would be considered in a determination of "abuse of the bankruptcy system", but you appear to be exempt from that).
If you file a Ch. 7 case, there is no legal protection in a bankruptcy that covers her. In a Ch. 13 case, the co-debtor case would probably protect her from suit.
You appear to be eligible for either Chapter, and probably Ch. 7 would suit you. Your timing may be important, as once you filed, a creditor may consider suit against your wife. It is the prospect of entry of judgment for the creditor that you want to avoid, as a judgment becomes a secured claim in bankruptcy, more difficult to avoid. Your filing of a Ch. 7 case will not affect her existing legal liability for the credit card debt or other joint obligations. That she has no income is not a legal defense to any creditor's claim.
Speak with an experienced attorney in your jurisdiction about these issues, and particularly, your exempt property issues, at your earliest convenience.
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