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Understand the Impact on Others (Spouse, Cosigners)

When you consider filing for bankruptcy, you should always determine what the impact would be on others, including your spouse and your cosigners, before proceeding. While you can certainly file bankruptcy as an individual, if you are married, and both of you have significant debt, you may consider filing a joint petition for bankruptcy. 

If you file separately, only your own debts will be discharged. Therefore, if your spouse has debt that isn’t in your name, those will not be impacted. For joint accounts, your debt may be discharged, but the lender can still try to collect from your spouse. 

The same is true for a cosigner. If you had a family member or friend cosign for a loan for you, even if the loan is discharged for you, it will not be discharged for your cosigner. The debtors will require your cosigner to pay the entire remaining balance of the debt, which was probably not what they intended when they cosigned for you. 

For joint property, the impact on your spouse depends on the laws in the state where you live. For the most part, if you own a home, you should have your mortgage qualified for bankruptcy to protect it.