Is It Better to File Bankruptcy Before or After Marriage?

A stressed couple working on finances in their home. They are reading documents while sitting on their couch.

When you're getting married, you or your partner's financial struggles are likely the last thing you want to think about. But if one of you is overwhelmed with debt and on the verge of bankruptcy, it's necessary to figure this out before you tie the knot—and tie together your finances.

Bankruptcy can allow you to eliminate all or part of your debt. It can also help you repay a portion of what you owe. When you file bankruptcy, you'll get creditors off your back but your credit health will take a major hit, which means borrowing in the future will be much harder if not impossible. And getting married can complicate the process, so it's a decision you or your spouse should make before your wedding date.

If bankruptcy and marriage both lie ahead, you may be wondering which should happen first. Whether a bankruptcy filing should come before or after marriage will depend on you and your partner's unique situation and circumstances.

How Marriage Can Affect Your Debt and Credit

You are personally on the hook for any debt you incurred before you said "I do." After you get married, however, the state you live in as well as the type of debt you take on will determine who is responsible for debts.

If you live in a community property state, both you and your spouse have an equal obligation to repay any debt you incur during your marriage. In a common law state, only debt that benefits your marriage or has the names of both partners on it will be a shared responsibility.

Now that you know how marriage may affect debt, you may be curious how it impacts credit. Since marriage doesn't merge credit reports, your credit will remain yours and your spouse's credit will remain theirs.

However, this doesn't mean one partner's credit will have no impact on their spouse. If one of you has poor credit, it may hinder your search for an affordable mortgage, car loan or any other debt that would benefit from a cosigning spouse.

When Does It Make Sense to File for Bankruptcy Before Marriage?

You may want to file for bankruptcy before marriage if you have an unmanageable amount of debt and your soon-to-be spouse does not. By filing for bankruptcy before you marry, you'll likely minimize the damage to your spouse's financial health.

In addition, if you'd like to file for Chapter 7, also known as a liquidation bankruptcy, filing before marriage is generally the better option. If you get married after you file, your spouse's income will be considered in addition to yours, which may push you over the Chapter 7 income limit.

When You Might Want to File After Getting Married

If you and your spouse both have a significant amount of debt, you may want to file for bankruptcy together after you get married. This will allow you to save money on court costs and legal fees because you'll only need to file one case. You'll also save time on meetings with trustees and creditors.

It's important to note that if you go this route and you or your spouse has significant property assets, they'll be a part of your bankruptcy sale. In this situation, it's a good idea to file for bankruptcy individually so you can protect these assets.

Does Filing for Bankruptcy Affect Your Spouse's Credit?

A Chapter 7 bankruptcy will remain on your credit report for 10 years from the filing date, while a Chapter 13 will be there for seven years. When you get married, your bankruptcy will be noted on your credit report, not your spouse's, if you filed for it individually.

However, this doesn't mean your bankruptcy won't affect your spouse in any way. For example, if you decide to take out a mortgage together, your credit may lead to a higher interest rate and less favorable terms.

If you filed for bankruptcy jointly with your spouse, both your credit and your spouse's will take a hit. This can make it even more difficult for you two to obtain joint credit.

Doing the Right Thing Can Save You Heartache

In deciding when to file for bankruptcy, weigh your financial health with that of your marital health. The course of action you take may drag down your partner's financial and credit health and, in turn, hurt your relationship. So have a candid conversation and put everything on the table before making your commitment. The good news is that filing for bankruptcy will likely change the way you spend and manage your money. This can help reduce the risk of money-related problems in your marriage and steer you and your spouse toward the right direction financially.