I am married and considering filing for bankruptcy without my spouse. How will the Arizona bankruptcy courts decide how our property will be used to pay off my creditors?

There is no doubt that being married while filing for bankruptcy makes the process more confusing and challenging. Deciding whether to file alone or jointly is a huge decision, but if only one of you is in debt, it may make the most sense to file alone.

When you do file alone, property owned by your spouse alone may be protected from creditors, but it is difficult to pinpoint exactly what property is at stake. Many married couples own things together, which makes the process even more challenging.

Arizona is a community property state, which makes filing alone a bit more confusing. In a common law state, if your name alone is on the deed, you own it—period. In a community property state, spouses typically have a 50/50 share in all property, income, and debt of the household. That means that if during your marriage your spouse bought a car and registered it in her name, Arizona community property law still sees that car as being owned by both of you. This leaves a lot of property “up for grabs” when it comes to repaying your creditors.

If your spouse came into your marriage with a lot of property, or inherited money specifically in her name, that property is likely considered separate property and will be protected from creditors. Separate property consists of:

  • Property owned by you or your spouse before your marriage
  • Gifts given to just one of you during your marriage
  • Property or money inherited by only one of you during your marriage

While some separate property does become entangled with community property making the division more difficult, our Valley bankruptcy attorneys can help walk you through your assets to determine what may be at risk when you file. Call Curry, Pearson & Wooten today at 602-258-1000 to speak with an experienced Phoenix bankruptcy lawyer and decide your next step.