Is It Better For A Married Couple To File For Bankruptcy Jointly Or To Have Only One Spouse File
When a married couple is considering filing for bankruptcy, they do have options in how they want to go about it. Because they are married, and may have joint assets, a couple can file for bankruptcy jointly. However, it is not required that a married individual files for bankruptcy in conjunction with their spouse. In some circumstances, it may benefit, or be less detrimental to the couple to have just one spouse file on their own. The following factors will help you determine how to file for bankruptcy in your unique situation.
DebtWhen filing jointly, all debt from both individuals becomes part of the bankruptcy estate. A joint filing will discharge the most amount of debt as it will cover each individuals separately held debt as well as any debt the couple has acquired together within the marriage. It is important to know what types of debt are dischargeable to determine if both spouses debts are worth bringing into the bankruptcy. Read more about what types of debt cannot be discharged through bankruptcy.
For example:If both individuals carry significant debt prior to the marriage, it would be wise to have it discharged all at once in a joint filing with one filing fee and one lawyer.
Filing For Bankruptcy Individually
If the majority of debt is owned individually, filing separately may be the better option. It may also be the right choice if:
- You want to preserve one spouses credit rating. Since filing for bankruptcy in Jacksonville will cause an individuals credit score to drop, filing separately may be the better option so that one spouses credit is preserved.
- Your combined assets exceed the bankruptcy exemptions. In Florida, property acquired during a marriage is often NOT the property of a bankruptcy estate. So, even if a couple has household furnishings worth tens of thousands of dollars, those assets are not the property of a bankruptcy estate if only one spouse files and if the couple acquired those assets after they married.
If youre married and considering filing for bankruptcy in Jacksonville, contact the attorneys at Parker & DuFresne today to learn more about which option best suits your needs.
If My Spouse Files For Bankruptcy Do I Need To As Well
One of the most frequent questions our married clients ask is how an individuals decision to file for bankruptcy will affect their spouse and the debts that they hold with their spouse. To answer this question, it is important to understand how courts handle debts that are jointly owned by a married couple.
Initially, it is important to dispel the common myth that married couples are automatically liable for the others debts. That is not the case. Typically, if the husband is filing for bankruptcy, the wife will not then be liable for all of the husbands debts. If the husband files for bankruptcy, it should not affect the wifes credit score. Of course, if a husband and wife both incur debt together, the situation is different. In this case, when the husband files for bankruptcy, the husband will no longer be responsible for the debt, but the wife will be entirely responsible for it. Thus, it is very important to understand the total assets and debts of each spouse before either spouse decides to file for bankruptcy.
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Arizona Is A Community Property State
Arizona is one of nine community property states in the United States. In community property states like Arizona, there is a presumption that both spouses equally own all property acquired during their marriage, absent an enforceable agreement to the contrary. In other words, property acquired during marriage generally belongs to the marital community. Arizona law provides two exceptions to the presumption of community property: 1) property acquired by gift, devise or descent and 2) property acquired after service of a petition for dissolution of marriage, legal separation or annulment if the petition results in a decree of dissolution of marriage, legal separation or annulment. Arizona Revised Statutes, A.R.S. § 25-211. Property that does not belong to the marital community is the separate property of the spouse who owns it, including property acquired by one of the spouses prior to marriage. A.R.S. § 25-213.
Types Of Bankruptcy Spouses Can File
Chapter 7 bankruptcy allows for the liquidation of the debtors nonexempt property to pay off creditors. There are special requirements that must be met. Chapter 7 is typically preferred by debtors who are still current with their secured payments such as their mortgage and car loan but are overwhelmed with unsecured debts like credit cards or medical bills.
Chapter 13, also called a wage earners plan, provides for the adjustment of debts for an individual with a regular income. It enables them to develop a plan to repay all or part of their debt over a defined period of 3-5 years. Under Chapter 13, if mortgage payments remain current, the petitioner will not lose their home.
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The Marital Deduction For Non
You may be concerned that since your spouseâs income has to be included in the Means Test, you may not qualify for a Chapter 7 bankruptcy. However, you still may be able to qualify for a Chapter 7 bankruptcy if, by using the marital adjustment deduction, you can show that your household income is not enough to meet your financial obligations. The marital deduction helps people qualify for bankruptcy if their non-filing spouse has significant income but does not contribute all of it to the householdâs expenses. The marital adjustment deduction allows you to deduct any expenses that your non-filing spouse pays that are separate from your household expenses. In other words, the Means Test takes into account that your spouse may not spend all of his or her income on your household expenses. Some examples of expenses that may be considered marital deductions may be credit card payments that your non-filing spouse will have to continue paying after your bankruptcy is completed, payments towards monthly grooming expenses such as haircuts and manicures, student loan payments, uniforms, domestic support obligations etc.
Which Debts Do You Want To Wipe Out
Getting rid of debt is one of the foremost concerns when deciding whether to file a joint bankruptcy with your spouse. Through a joint bankruptcy, you can wipe out all of the dischargeable debts you both owe. However, if only one spouse files, the non-filing spouse will still be on the hook for his or her own debts as well as any joint debts . So when you share many of the same obligations, filing a joint bankruptcy is usually the better option.
On the other hand, if you have few or no joint debts and your spouse has a lot of individual debts, the better course might be to let your spouse file alone. You’ll retain the option of filing for bankruptcy later on if necessary.
Special Note for Community Property State Residents: If you live in one of the few community property states, the calculation might be different. In many of these states , community debts are discharged even if only one spouse files for bankruptcy, and discharged creditors cannot go after any community property so long as both spouses are alive and still married . Conversely, you might lose more property in these states if you file individually .
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Why File Chapter 13 Without Your Spouse
If you are asking yourself, Can I file Chapter 13 without my spouse?, you now know that the answer is most likely yes. But you need to first make sure that filing Chapter 13 without your spouse is the right decision for your unique case. A qualified Chapter 13 lawyer can help you make that decision, but we have laid out some common reasons people who are married sometimes want to file Chapter 13 alone.
When Filing Separately Might Be A Better Option
If you file for bankruptcy separately, all of your separate property and your share of the marital property is part of the bankruptcy estate. So it might make sense to file separately if the other spouse has significant separate property to protect.
In some situations, you may have to file separately, regardless of your wishes. For example, if one spouse received a discharge in a Chapter 7 case within the past eight years or a Chapter 13 case within the past six years, that spouse won’t be allowed to file another Chapter 7 bankruptcy case. If you and your spouse have separated and your spouse won’t cooperate, you may also have to file separately, even if a joint filing would be the better option.
If you are both willing and able to file for bankruptcy, a separate filing might make sense if:
- You own property together as tenants by the entirety, and your state excludes such property from the bankruptcy estate if only one spouse files alone. This is especially important if you own your home as tenants by the entirety. Filing separately in this situation could allow you to keep your home, while filing jointly could cause you to lose it.
- One of you has most or all of the debt, you haven’t acquired any valuable property as a couple, and you married relatively recently. In this situation, filing separately will allow the spouse who isn’t facing debt problems to keep his or her separate property, maintain a good credit rating, and steer clear of the bankruptcy case altogether.
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The Bankruptcy Community Discharge
The bankruptcy discharge is a court-ordered injunction prohibiting collection of pre-petition debt. It permanently bars creditors from pursuing the debtor who filed bankruptcy for payment. But what about the non-filing spouse of the debtor? Can creditors still pursue him or her for collection on debt that was incurred during marriage?
In the bankruptcy world, there is something called a community discharge. Even when only one spouse files a bankruptcy petition, the marital community also receives a discharge. This means that the marital community is protected from the claims of creditors for debts included in the bankruptcy. For example, the non-filing spouses wages cant be garnished because his or her wages are community property. Likewise, creditors cannot reach a bank account holding community funds. However, the protection for the marital community does not extend to the non-filing spouse personally. Creditors can still collect against any separate property owned by the non-filing spouse.
Below is a hypothetical to illustrate how a non-filing spouses separate property is at risk following a community discharge:
Filing Chapter 13 Without Your Spouse Contact A Bankruptcy Law Firm Llc
It is possible to file Chapter 13 without your spouse, but you need to consider a wide variety of factors before moving forward with this strategy. An experienced Chapter 13 bankruptcy lawyer can help you understand your unique situation and legal options.
The trusted bankruptcy attorneys at A Bankruptcy Law Firm, LLC, have helped thousands of clients get financial relief through bankruptcy, and they can help you, too. We proudly offer free initial bankruptcy consultations so you can determine whether filing Chapter 13 without your spouse is the right move in your situation. To claim your free consultation, give us a call at or contact us online today.
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Contributing To Your Spouses Registered Retirement Savings Plan
Contributions you make to your spouses RRSP can be deducted from your taxable income. This is advantageous if you have a higher net income, which is taxed at a higher rate than your spouse. However, the contributions you make to a spouses RRSP reduce your own deduction limit. The total amount you can deduct for contributions you make to your RRSP or that of your spouse cannot be more than your own deduction limit. If you cannot contribute to your RRSP because of your age, you can still contribute to your spouses or common-law partners RRSP until the end of the year when your spouse or partner turns 71. For more on RRSP, please click here.
Including Your Spouses Income On The Petition
When you file Chapter 13 bankruptcy, one of the early parts of the process involves filling out Form 22C. This form is used to assess your current disposable income, which will inform the amount you will have to pay each month as part of your repayment plan.
Because your spouses income could contribute to the amount of disposable income you ultimately have each month, you must include your spouses income on your Chapter 13 petition if you share a household with them. This is true even if you are filing Chapter 13 without your spouse.
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Bankruptcy For Spouses In Nevada
Known as a joint filing, it is possible for Nevada couples to file together in order to discharge both join and personal debts. However, there are a number of important caveats you should know, which is why it is always worth discussing your case with a Nevada bankruptcy attorney before filing your bankruptcy petition. At Vohwinkel Law, we have extensive experience representing married couples in a wide range of bankruptcy matters. Call our Las Vegas office today to set up a free, completely confidential review of your case.
Can Spouses File Bankruptcy Separately
If you and your spouse are contemplating filing for bankruptcy, you may wonder if you are required to file jointly. Married couples can, in fact, file separately. When filing for bankruptcy in Jacksonville, married couples have the following options when choosing to file for Chapter 7 or Chapter 13:
- One spouse files individually
- Both spouses file individually
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Mar Do I Have To File Bankruptcy With My Spouse
While many married couples file bankruptcy jointly, there is no requirement that they do so. You are entitled to file your own, separate, bankruptcy, just as you are entitled to your own credit rating.
If your spouse has already filed bankruptcy, and you have become the target of collection activity on a debt that you dont feel that you owe, you may want to take similar steps. Requesting proof of your responsibility for the debt is a first step. Dont assume that the credit card company wouldnt be dunning you if you werent responsible. Just as many people sign for an account when their intention is only to obtain a card it is not unheard of for a cardholder to be erroneously listed as a responsible party in the credit card companys files. Most lenders rely almost exclusively on computer databases, and that information is only as good as the person doing the data entry.
An attorney can help you decide whether you, or you and your spouse, will benefit from a bankruptcy filing.
Can Being Newly Married Affect A Bankruptcy Filing
Oct 7, 2021Bankruptcy
A couple that has recently gotten married and is seeking to file for bankruptcy may be facing some different options than if they were filing on their own. The option to jointly file for bankruptcy can make a positive difference, but being married can also affect Chapter 7 bankruptcy filings and make it harder to protect some property.
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How Will My Bankruptcy Affect My Spouse
According to statistics from the American Bankruptcy Institute, there were 26,723 total bankruptcy filings in Texas in 2020. Unexpected life events can make meeting financial obligations difficult for married couples. Spouses facing financial distress may decide to file for bankruptcy either individually or together. Understanding how filing for bankruptcy affects your spouse is crucial to help you make the right decision.
At Oliva Law, we have the experience and resources to assist and guide individuals, couples, and families through the complexities of bankruptcy proceedings. Our experienced Texas bankruptcy attorneys are available to discuss your financial situation and explore your available options. As your legal counsel, we will educate you about the benefits and drawbacks of filing separately or jointly and help you make informed choices.
At Oliva Law, we’re proud to serve clients in McAllen, Corpus Christi, Brownsville, Harlingen, and throughout the Rio Grande Valley, Texas.
When Joint Filing Isnt Right For You
However, depending on the income, assets, and debts of the couple, a joint filing may not always be in their best interest. There are two main considerations that a couple must pay attention to before making any decision regarding their bankruptcy options.
A couple must consider the following when filing:
- . Qualifying for Chapter 7 bankruptcy means passing a means test. This compares the income of the filer with the average income in Texas. If the income is above the median, the filer will have to disclose their expenses to determine if they qualify. A married couple must include both incomes, even if they are filing for one person. This can put the average income of the filer over the median income, even if they personally dont make enough to cover their expenses.
- . Chapter 7 bankruptcy exemptions allow someone to keep a certain amount of property. A couple that files jointly may be able to double the amount of the exemption to account for double the property. Depending on the property that needs to be exempted, filing separately can allow each spouse to protect more of their own separate property in the process.
If you are wondering how your marital status affects your bankruptcy filing and what your best options for filing may be, contact us today. Dethlefs Pykosh & Murphy is backed by over a decade of experience!
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