.st0{fill:#FFFFFF;}

Filing for Bankruptcy When You’re Married


In Australia, bankruptcy is the legal process where an individual declares that they are unable to pay their debts. As part of the bankruptcy process, an independent Trustee will assess your assets, debts and financial situation and create a plan to repay some of the debt owed to creditors. At the end of the bankruptcy period, you’ll be released from most of your debts, free to start life afresh.

For married couples though, the bankruptcy process can be a little more complicated. Declaring bankruptcy can have a major impact on your life, spouse and relationship. It’s important to seek professional advice to find out how your personal insolvency can affect your spouse. In this article we will cover the basic details of filing for bankruptcy and how it may affect your spouse.

Filing For Bankruptcy as an Individual

It is a common arrangement for married couples to keep their finances largely separate. Aside from major assets such as houses, many couples may otherwise keep their income and debts separate from one another.

If that’s the case for you, it’s possible for one spouse to file for individual bankruptcy. Individual bankruptcy follows the normal bankruptcy process. A trustee will assess your finances and obligations, and they may sell some of your assets to repay creditors. The good news is that, under the individual bankruptcy process, you are taking sole responsibility for your debts and your declaration should have minimal ongoing impact on your spouse.

It’s important to note that your spouse will still be required to participate in certain parts of the process, such as providing full details of their income, assets and liabilities. Individual bankruptcy may have some effect on your spouse’s portion of joint assets and liabilities.

Filing For Bankruptcy as a Couple

If you and your spouse share finances, you can file for bankruptcy together. Both partners will need to complete the appropriate petition and submit them separately. A couple may both file for bankruptcy but maintain separate estates, or they may file together as a joint estate. When filing for bankruptcy with a joint estate, the petition must be filed with a note that the couple is filing jointly.

When filing for bankruptcy as a couple, all individual and shared assets and liabilities will be considered by the trustee, and both partners will be equally impacted by the bankruptcy’s ongoing effects.

The Impact of Bankruptcy on Couples

Voluntary bankruptcy is a major step and should be considered a last resort. For married couples, individual bankruptcy has far-reaching effects for the person that declared bankruptcy, but it can limit your partner’s liability. Your spouse may still experience several effects, including:

  • Joint accounts and assets. Any accounts and assets a couple co-owns – such as bank accounts, investment accounts and home loans – are a shared responsibility. That means where one partner files for bankruptcy, the other partner can still be held legally responsible for the full amount. In the case of shared mortgages, this can put extreme strain on the non-declaring partner, who may be required to make full repayments on their own.
  • Going on holiday. A bankrupt is only permitted to travel overseas with written permission from the trustee. This can limit your family’s ability to travel or take holidays together.
  • Joint business ventures. A bankrupt is not permitted to be the director of a company. Joint businesses shared with a partner may need to have their directorship transferred to another representative.

Seeking Professional Bankruptcy Advice? Contact SV Partners Today

Filing for bankruptcy can be a tricky proposition at the best of times. For married couples, the situation becomes more complex, and your partner may be affected despite your best efforts. Before you reach any decisions, it’s important to seek professional advice regarding your situation. The qualified team at SV Partners has broad experience in the field of personal insolvency, and we can help you and your spouse investigate your options and find the best solution possible. You can find more information on bankruptcy and personal insolvency in our FAQ section.

If you are experiencing financial difficulties and would like to arrange a confidential consultation, you can contact us on 1800 246 801 or get in touch with us online.

Are you concerned about your financial position? Contact us now for an obligation free consultation on