Q: I was working in the oil and gas industry as a machinist. The downturn hit me hard, and my last employer stiffed the contractors pretty bad. My wife and I have mostly separate finances due to my time away from home, and file our taxes as “married filing separately,” though we have a joint credit account, a joint HSA and some assets that are in both our names. She has a good job that’s making sure that the bills get paid, but I am on the hook hard for my credit cards, a truck, a fifth wheel trailer, and some equipment that I bought under my own name when times were better. I can’t ask her to pay these off, it’s thousands of dollars per month and it would total her finances, too. She’s dead set against filing for bankruptcy because she’s afraid of losing her own credit, or losing the house. Can one spouse file bankruptcy without involving the other?
Yes, You Can File for Bankruptcy Without Your Spouse
A: The short answer to this question is yes, you can file for bankruptcy without having your spouse file, too. However, your household income is considered when you file for Chapter 7. This is called means testing, and determines if you are eligible for Chapter 7, or if your filing should be under Chapter 13, instead. Further, assets that you and your wife hold in common may be considered part of the bankruptcy estate. So while you may file without having her file, what you can’t do is rule out her involvement as she needs to provide information to the trustee, too. Her income and the household assets will also figure in any repayment plan ordered by the trustee, and your filing will not affect her credit unless you have debts in common under your filing.
Now, you’ve alluded to a pretty complex situation here, where you’re a contractor and have not been paid by a previous employer – which is what I assume was the factor in your decision to investigate filing for bankruptcy. You didn’t say if you bought your vehicles and equipment as an LLC or other type of company, or if your credit cards were in your name. The HSA is protected under Florida law and is not part of the bankruptcy estate, through the Eighth Circuit BAP ruled in re Leitch that HAS accounts are part of the bankruptcy estate.
I can only offer a limited amount of advice online without meeting you. I would need to see you, your wife, and your financial paperwork in my office to give you any definitive advice. We have offices in Fort Lauderdale and West Palm Beach, and are open seven days a week. The initial consultation is free, and I think we can provide you with enough of a direction and information for you both to make an informed decision. Give a call, set up and appointment, and we can get started on getting you clear of your debt problems.