Many married couples file joint tax returns. However, if it become necessary to file for bankruptcy, spouses are neither required nor inclined to file bankruptcy together. Being married, and having filed taxes jointly nevertheless raises questions regarding the effects of bankruptcy on the non-filing spouse.
FILING AND NON-FILING SPOUSES
When one spouse files for bankruptcy, even if they have filed taxes together, it does not bring the non-filing spouse into bankruptcy. By the same token, the non-filing spouse does not enjoy the benefits that the filing spouse will receive; for example, there is an automatic stay, which freezes all attempts by creditors to collect on debts when someone files for bankruptcy. This will only apply to the debts of the filing spouse. This is also true when the bankruptcy court finalizes its proceedings: only the debts of the filing spouse will be discharged.
SHARED DEBTS
If both spouses have contracted in the creation of a debt, then they are both liable to the creditor. If only one spouse files for bankruptcy, the non-filing spouse can be legally pursued by the creditor for payment. The exception to this would be if the filing spouse filed under Chapter 13. In this case, if consumer debt is to be completely repaid under the Chapter 13 plan, then the non-filing spouse is protected by the Co-Debtor Stay as per §1301.
If part of the bankruptcy is due to taxes owed, and the spouses have filed their taxes jointly, both spouses remain liable for the amount of tax due, regardless of who filed for bankruptcy.
Credit bureaus will note on the non-filing spouse's credit report the bankruptcy if jointly held debts were settled during the proceedings. The law is ambiguous at the moment as to how, or if, credit bureaus should mention the bankruptcy of the filing spouse on the credit report of the non-filing spouse.
JOINTLY OWNED PROPERTY
If you have filed taxes jointly, it will not affect property owned by spouses individually. The only way in which property is affected is when it is jointly owned between the spouses. When jointly owned it can be included in the bankruptcy estate making it potentially available to pay creditors. In the case of community property jurisdictions, both halves of the property will also become part of the bankruptcy estate - but this will be due to community property laws, not because the spouses have filed their taxes jointly. In community property states, the non-filing spouse is also benefits from the filing spouse's bankruptcy discharge. This also means that any property purchased after the bankruptcy by the couple cannot be pursued by creditors of the non-filing spouse. They can only collect against property owned separately by the non-filing spouse, which generally means property owned prior to the marriage.
