The Bankruptcy Law Center
Law Office of Don Provencio, PA
Albuquerque, NM

The Bankruptcy Law Center - 505-242-STOP (7867)

If you are going through financial and marital problems the last thing you need is someone judging you or giving you a lecture. As your attorney my job is to help you, not judge you. I spend time with you and focus on your best interests empowering you with the information you need to make sound decisions.

Married couples struggling with debt can file a joint bankruptcy or one spouse can file without the other spouse filing. There are reasons why it may benefit a married couple for one spouse to file without the other spouse, especially if you have not incurred many debts during the marriage. I can explain those benefits after I review the appropriate documents that will determine that decision. I will need to know how all property is held and titled by each spouse. Usually this only involves understanding how the home or any other real property owned prior to marriage or acquired during the marriage is currently held or titled.

What Happens When Only One Spouse Files for Bankruptcy
Complexities exist when only one spouse files for bankruptcy. The impact on community property and community debts is complex in any Bankruptcy. Without getting into the law too deeply, the following is a cursory explanation of the ramifications of one spouse filing for bankruptcy without the other spouse. Under community property laws in New Mexico, when one spouse files for bankruptcy without the other spouse then all of the community property comes into the bankruptcy estate with the bankruptcy discharge of the filing spouse protecting the community property from the creditors of the non-filing spouse. But, any separate property of the non-filing spouse, whenever acquired, remains liable for community debts included in the bankruptcy. All property in a marriage in New Mexico is presumed community property and must be disclosed in a bankruptcy except property owned by the non-filing spouse prior to the marriage or obtained by will or inheritance by the non-filing spouse prior to or during the marriage.

Essentially, the non-filing spouse obtains some benefit from the bankruptcy discharge of the filing spouse even though the non-filing spouse remains personally liable for his or her debts because, after the bankruptcy discharge of the filing spouse, the creditors of the non-filing spouse cannot collect from community property which was disclosed and exempt in the bankruptcy of the filing spouse. Be aware that if the non-filing spouse is working then some of those wages could be considered separate property and subject to collection actions after a bankruptcy discharge of the filing spouse.

This is labeled a community property discharge and continues to protect community property so long as the spouses remain married. Divorce or the death of the filing spouse severs the community which then may permit creditors of the non-filing spouse to move against the newly created separate property of the non-filing spouse which was formerly community property prior to the divorce or death of the filing spouse.

After a bankruptcy discharge is entered for the filing spouse, a judgment obtained by a creditor against a non-filing spouse can only be satisfied from the separate property of the non-filing spouse.

The community property concepts as they relate to bankruptcy law are somewhat difficult to comprehend on a first read; but, if you elect to file bankruptcy without your spouse then I will make sure you have a clear understanding of how your non-filing spouse will be affected by your bankruptcy filing.