I have debts from a business. I have little income, but my spouse has a good job. Should I file for bankruptcy?
If creditors can collect from jointly owned assets, bankruptcy might be a good way to protect those assets. However, your spouse's income will be included in the bankruptcy, making it harder to qualify for Chapter 7 bankruptcy and affecting how much you must pay to unsecured creditors in Chapter 13 bankruptcy.
Learn more by reading Are You Personally Liable for Business Debts?
Depending on the laws of your state, your spouse might not be liable for the debts you've incurred individually. However, even if your spouse isn't obligated, a potential judgment creditor might be able to collect from you and your spouse.
For instance, if the two of you jointly own assets—such as a bank account she deposits income into—then a judgment creditor might be able to "levy" or withdraw funds from the account. For more information, read Bank Levies on Joint Accounts (Spouse).
Filing for bankruptcy might be a good option, assuming you meet the eligibility requirements. Your spouse doesn't have to file bankruptcy with you, and probably shouldn't, especially if she has little or no debts.
If you want to take care of the debt by filing for bankruptcy, you must include your wife's income if you share the same household—even if you file alone. Since your wife's income is appreciable, it might affect your eligibility to receive a discharge in a Chapter 7 bankruptcy.
But there's an exception. You don't need to meet income qualifications if most of your debts are business debt. You can learn more by reading about the Chapter 7 means test.
Your wife's income will also affect the amount you'd pay in a Chapter 13 bankruptcy. You can learn more by reading Your Obligations Under a Chapter 13 Bankruptcy Plan.
Although you must include your nonfiling spouse's income, you might be able to take deductions and pass the means test or lower your disposable income. The marital adjustment deduction allows you to deduct some of your spouse's personal expenses if they're paid with her own separate income. You can exclude that portion because it isn't used to support your household.
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