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.