Category Archives: Communit Property and Bankruptcy

Can Just One Spouse File Bankruptcy In California?

By

A common law marriage is when a couple holds themselves out to be married but the spouses did not actually have a marriage ceremony or go through any of the formalities of a marriage. You need to obtain a marriage certificate. California does not recognize common law marriages. There are other states that do recognize some form of common law marriage, but California is not one of those states. The types of marriages that are currently recognized in California are 1) traditional marriage, 2) domestic partnership, and 3) same sex marriage.

California is a community property state, which means that all assets accumulated during marriage (whether it is a traditional marriage, domestic partnership or same sex marriage) are considered property jointly owned by both spouses even if only one spouse purchased or earned that asset (unless that asset was obtained by gift, inheritance or devise or a prenuptial was executed). The separate property of either spouse is not liable for the debts incurred by the community.

So what does this mean if you are filing bankruptcy? When you file for bankruptcy you need to list all assets owned personally by you and also all community property assets if you are filing bankruptcy without your spouse. A lot of our clients think that just because they are filing bankruptcy by themselves they only need to list their own assets and their own income on their bankruptcy petition. This is not true and that can get you in trouble if you do not tell your bankruptcy attorney about all of the assets that are owned by both you and your spouse. Your spouse’s assets can be subject to liquidation if you file a Chapter 7 bankruptcy case unless your bankruptcy lawyer protects those assets by properly exempting them in your bankruptcy schedules. Since California is a community property state that means you need to list joint assets and household income and expenses. The theory behind this is that when you are married everything is joined together and owned fifty-fifty. Even if one party makes $1,000 a month and the other party makes $10,000 a month both parties join their incomes together to pay household expenses and for the benefit of the community.

On the flip side if you are not married but are living together with your significant other you do not need to list any of your significant other’s assets in your bankruptcy petition since it is not considered community property. Your assets are only considered community property if there was a legal marriage and California does not recognize common law marriages. This also means that your creditors will not be able to go after your significant other’s assets even if you have lived together for 10 plus years. There are always exceptions to the general rule of course but if your case is more complicated I recommend that you seek the services of an experienced bankruptcy attorney to discuss your case.