In this article, you will learn…
- The benefits to filing joint bankruptcy when both parties are liable,
- The difference between filing joint bankruptcy versus having a non-filing spouse, and
- The impact of a non-filing spouse’s income on bankruptcy.
What Happens When A Married Couple Files For Bankruptcy Together?
There is nothing different about filing together from filing separately. It’s just a joint case and both parties receive a discharge.
When You’re Filing Together, Does It Matter Who Is On The Debt Is That Not Of Any Importance?
Whether it’s a joint case or not, it doesn’t matter who is listed on the debt. There are instances where we have non-filing spouses, because they’re not obligated for that debt.
What Happens If One Spouse Files For Bankruptcy On Their Own Individually?
When one spouse files for bankruptcy, it doesn’t affect the other spouse. The non-filing spouse’s name and social security number is never going to be associated with a bankruptcy filing.
The only impact to the non-filing spouse is that to qualify for Chapter 7, the income of both spouses have to be considered to determine the eligibility of the filer.
In Chapter 13 bankruptcy, the income of a non-filing spouse is considered in determining the disposable income available to the filing spouse.
Is It Better To File Together Or Individually? Does It Not Really Matter?
If both parties have debt that they are obligated to pay, then it’s so much easier and wiser to file joint as long as they each have liability. If there’s a non-filing spouse that doesn’t have any liability, there’s no reason to join that spouse in filing bankruptcy.
If I File For Bankruptcy Individually Can A Creditor Target My Spouse For Their Debts?
If you file for bankruptcy individually, a creditor can target your spouse if they have any liability to begin with. It’s why we have to answer whether or not the non-filing spouse could potentially be held liable. A spouse is not automatically liable just because they’re married; there would be other rules that come into play.
Which Chapter Of Bankruptcy Is Best Suited To A Couple Filing Together?
The chapters of bankruptcy completely depend upon the facts and circumstances on a case-by-case basis. You cannot make any kind of general statement as to whether one is better than the other without reviewing an individual’s specific circumstances.
Does My Spouse’s Income Affect My Bankruptcy If I’m Filing Alone?
Yes, your non-filing spouse’s income can affect your bankruptcy even if you’re filing alone. This is because a non-filing spouse’s income is taken into consideration for both Chapter 7 and Chapter 13.
For Chapter 7, a non-filing spouse’s income is taken into consideration to determine if the spouse qualifies. For Chapter 13, the non-filing spouse’s income is taken into consideration to determine the amount of the payment that might be required.
Is It Better To File For Bankruptcy Before You Are Married Or After You Have Married?
As a general rule, the best course of action is to file for bankruptcy before you are married.
What About Divorcing Couples? When Should They Consider Bankruptcy As An Option?
It would be difficult to answer broadly if divorcing couples should consider bankruptcy as an option. I would recommend waiting for the divorce to finalize before consulting with an attorney about bankruptcy.
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