Generally, in Illinois, when you are married, the debts your incur together with your husband or wife are debts that both of you are responsible for. The Illinois Family Expense act says that debts incurred for the welfare of the family are the responsibility of both husband and wife. A good example is medical bills. If your child goes to the emergency room, both husband and wife are responsible. If your husband has medical treatment, your wife is responsible, etc. In the case of credit cards, you have to do more to have the other spouse responsible. Many times, the husband or wife gets a credit card, and gives the other spouse a card to use, or allows them to be an “authorized user”. In those cases, both spouses would be responsible, and it is best for both husband and wife to file bankruptcy. This is because if one person files, the creditor can still sue the other one. So the bankruptcy would not protect the other spouse, unless it is paid in full. With those types of debts, in most cases, it is advisable for both husband and wife to file for bankruptcy together.
There are other situations when it is best for only one spouse to file for bankruptcy protection, either Chapter 7 (debt elimination or liquidation) or Chapter 13 (payment plan). In those situations, as outlined below, even though only one spouse files for bankruptcy, the court still requires complete income and expense information for the other spouse.
Contemplating bankruptcy isn’t easy in the best of circumstances. Often, however, bankruptcy becomes necessary as a result of a bigger familial picture – major medical problem, job loss, or divorce. Although the bankruptcy code allows a married couple to file jointly, some couples decide to file as individuals. There are several reasons why a client might wish to do that: Some don’t have any joint debts and they want to maintain the credit rating of at least one member of the household in the event a sudden need for credit arises; Sometimes only one spouse has major debt because of a prior relationship or marriage; for some others, one spouse doesn’t want the other spouse to know about the bankruptcy, or because the other spouse doesn’t want to cooperate.
In any case, clients often assume that since their spouse isn’t filing, the other spouse will not be involved at all. This is not entirely true. While your spouse’s name won’t be published, nor will their exact financial status be revealed, the bankruptcy court will want to know the extent of their contribution to your household finances. The Bankruptcy court wants to make sure that a client whose spouse makes a lot more money is not discharged of his/her obligation to help out his/her spouse. They want to make sure that the lower income spouse isn’t purposely racking up debt contemplating bankruptcy to get rid of them and with no intention to pay them. Remember, that the bankruptcy court is protecting you from your creditors. And in return, you have an obligation to reveal all of your financial information to the bankruptcy court. To achieve a fair result, the bankruptcy court tries to balance the integrity of the bankruptcy system against the privacy rights of the non-filing spouse.
So, what information should you bring to your attorney? In general, your attorney will require the income your spouse earned in the last six months, and all of your tax returns, whether filed jointly or not. Your attorney may also ask you to itemize your household expenses, and those that are purely your spouse’s. Your particular situation may warrant the disclosure of more documents. Only your attorney ca tell. It is important, therefore, to discuss with your attorney, what information you need to gather from your spouse. If you are separated from your spouse, your attorney may require an affidavit. But at a minimum, be prepared to gather your spouse’s income / expenses for the last six months – whether pay stubs, cash flow statement, or income / expense summaries.
Law Offices of Daniel J Winter
53 W Jackson Blvd, Suite 718
Chicago, IL 60604