One of the ways we express the unity and “oneness” that marriage
represents is financial unity. One of the major financial advantages to
marriage is being able to combine resources and credit lines to sign on
for large debts. New cars, mortgages, and other large loans are more tenable
when you have two incomes and two names attached to the debt.
However, when things aren’t going as well as we hope, marriage adds
a new wrinkle of complexity to
bankruptcy. Spouses are faced with a choice: do they file individually? Do they declare
bankruptcy together? Both roads have different consequences and complications
attached, so it really depends on the situation. Here are some ways you
can determine which path is right for you.
Is Your Debt Primarily Joint Debt?
If the loans you are looking to discharge are jointly owned, then you should
file jointly. One, this is one situation where filing individually wouldn’t
make a difference. If you choose to file individually, creditors are able
to go after every person who signed their name to the deed. If you declare
bankruptcy and your spouse’s name is on the deed, they’ll
go after him or her regardless.
Filing jointly will allow you to save money on legal fees, and it would
include all the individual loans that you might have been looking to discharge
anyway. This excludes any non-dischargeable debt, of course—student
loans, child support, court fines, certain secured debts, and government
penalties fall into this category. Other than these, yours and your spouse’s
loans would be discharged, joint or otherwise.
When Your Debt Is Primarily Limited to One of You
This is certainly a tough but navigable situation: your or your spouse
has accrued a great deal more debt than the other. Thankfully, if these
debts are solely in their name, filing for bankruptcy individually might
be advantageous for you both.
For instance, filing alone will protect the other spouse’s assets.
That allows one of you a position of stability while the other starts
clean and begins rebuilding their credit. While the court will still consider
your spouse’s income when ruling on your bankruptcy, filing as an
individual gives you a little more power and a faster route to recovery
when one of you is the sole debtor.
Things to Consider for Chapter 7 Bankruptcy
If a spouse’s debt is largely non-dischargeable under Chapter 7 bankruptcy,
joint filing is not all that advantageous. The person with dischargeable
debt may want to file alone. More importantly, if you’re considering
filing for Chapter 7, then make sure to calculate how your combined incomes
hold up against the means test. If your joint income disqualifies you
from Chapter 7, then you’ll definitely want to file individually.
No matter what you choose, you don’t have to navigate these complex
and stressful waters alone.
Contact our bankruptcy lawyer in Boca Raton, FL at the Law Offices of David Kovari, PA today.