The audience for this blog post is very specific: Chapter 7 filers in California that are married, but filing bankruptcy without their spouse. If you match this criteria, you need to know about the Spousal Waiver.
A married couple may file bankruptcy together. Both spouses are listed on the Bankruptcy Petition and are both given a discharge at the end of the case. However, spouses are not required to file bankruptcy together. One spouse may file bankruptcy on his or her own. In such a case, the non-filing spouse stays out of bankruptcy.
A spouse using California’s 703 set of exemptions will need to secure the non-filing spouse’s signature on a Spousal Waiver. This is because of specific language in California Law that limits a married couple to using one set of exemptions.
Specifically, the waiver prevents the non-filing spouse from utilizing California’s 704 exemptions while the other spouse’s case is using the 703 exemptions. That’s it. California law is set up this way to prevent a married couple from filing two separate bankruptcies and utilizing both sets of exemptions. This “best of both worlds” approach is not what the Legislature intended when it created the two distinct sets of exemptions.
Typically, getting the non-filing spouse to sign the Spousal Waiver is not difficult. However, it can be a challenge when the two spouses are not getting along. The non-filing spouse needs to be concerned about signing the waiver only if he or she is contemplating filing his or her own bankruptcy case while the other case is still active.
Update: want to know what happens when a spouse won’t sign? Click here for my updated blog post.
The Bankruptcy Court in Sacramento has a PDF Spousal Waiver for download. You can download the waiver form here. The waiver should be filed with the Court and also provided to your Bankruptcy Trustee.
If you have questions regarding the Spousal Waiver in Chapter 7 bankruptcy, please contact Sacramento Bankruptcy Attorney Rick Morin at (916) 333-2222.