As you both are contractually responsible for the debt, my recommendation would be to speak to a NC attorney for a joint bankruptcy; but not for the reasons you ask. A Chapter 7 bankruptcy does NOT have a co-debtor stay. Simply put. if one of you file; the other will bear the brunt of collection efforts you may feel are completely being wiped out in the sole bankruptcy. For your concern, as well as this issue I raise, I think it best you talk to a NC attorney about a NC bankruptcy.
Please note this is to be considered general information and not legal advice about any particular situation. The answering of any question does not create an attorney client relationship and does not make the answer given here specific legal advice. If you wish to obtain legal advice; then please do consult an attorney with your issue. I am an attorney licensed in New Jersey and Pennsylvania. In handling bankruptcy, and helping individuals seek relief under the bankruptcy code, my practice has proudly been deemed a debt relief agency.
I agree with Attorney Huber. But in response to your question, if you file for bankruptcy while your wife does not, she will still be responsible for the debt. And if that debt is cancelled, she will receive the economic benefit of the cancellation (where you did not since the debt was discharged by the bankruptcy).
Therefore, she will incur the cancellation of debt income (and only she should receive the Form 1099-C).
Legal disclaimer: This answer is not legal advice nor does it constitute tax advice. Consult an attorney for legal or tax advice.
Also, if the debt is cancelled as to both of you and only one filed for bankruptcy, the tax liability for the other is not gone. You must file before the debt is forgiven or you may be responsible for the tax debt.
Mr. Goldstein is a Virginia-licensed attorney only. The information is not, nor is it intended to be, legal advice. You should consult an attorney for individual advice regarding your own situation. Answering this question does not in any way constitute legal representation. Contacting Mitchell Goldstein or the Goldstein Law Group does not constitute legal representation, nor is any information you provide protected by attorney-client privilege until otherwise advised.