Today’s question relates to whether to file jointly or separately. It is this: “What are the pros and cons of adding your spouse to a personal bankruptcy? What could happen to her annuity?”
Whether to include a spouse in your bankruptcy or file separately depends on whether the spouse has significant debt or assets. Generally, if two people have been married for several years most of the debt will be jointly owed. Most couples sign together on mortgages, get credit joint credit cards, etc. In some cases, such as second marriages, the parties have separate debt. Bankruptcy isn’t something to be done without a lot of forethought, so you need to analyze each party’s debts, property and income.
If a couple owes joint debt, filing by one alone will leave the other exposed to the creditors. Therefore, when most debt is jointly owed it’s usually best to file jointly. In cases where each party has his or her own debt, and especially where each party has his or her own property, you need to make a careful examination of what property will be put at risk by a joint filing. If most of the debt is owed by one person and most of the property is owned by the other, it will probably make sense to have the first file separately and keep the spouse out of bankruptcy.
The bottom line is, don’t go into bankruptcy without knowing what’s likely to happen.