Bankruptcy Lawyer Bryan W. Stone answers the question: “Can I buy a home after bankruptcy?”
If you are married you have gotten to experience firsthand how intertwined your life can be with another person. This is true on both a personal and financial level and (as any married person will attest) it can be both good and bad. If one person experiences a financial success, either a promotion or a bonus or makes some smart investment decisions, both will usually share in the reward. The same is also true for financial missteps, with both parties often suffering equally when financial disaster occurs. If you are married and experiencing financial stress and are considering filing for bankruptcy, you may assume that you and your partner must jointly file. However, you can consider bankruptcy on either a joint or individual basis. To find out more about filing bankruptcy while married, keep reading.
First, if you are married you should know that you are not legally required to file for bankruptcy jointly with your spouse. The two of you are still individuals and are allowed to individually file for bankruptcy protection, keeping the other person out of the process. Whether that’s a good idea or a bad idea depends on the circumstances of your case.
What factors should you consider when deciding whether to file individually or jointly?
If you’re trying to decide between filing separately or filing jointly, consider the following factors:
-bankruptcy exemptions in your home state
-whether debts are held in one person’s name or joint
-the amount of property you own
What are benefits of filing separately?
The most obvious occasion where it makes sense to file for bankruptcy individually is when only one spouse has debt. If that person files for bankruptcy on his or her own, that his or her debts will be discharged without negatively impacting the other spouse’s credit.
Another time that filing individually makes sense is if local bankruptcy exemption laws are strict and do not allow you to double up exemptions on a joint petition. If that’s true, then you can protect twice as much of your jointly held property by filing two separate bankruptcy petitions rather than one joint petition.
What are the downsides of filing separately?
One downside of filing separately is that two separate bankruptcy cases will cost more time and money. Paperwork will have to be done twice, court costs paid twice and attorney’s fees will increase as a result.
Another downside is that filing for bankruptcy alone does not offer any protection to the non-filing spouse. That means if the other party is also in debt and struggling, he or she will still face aggressive collection attempts. This is especially true if your debts are primarily jointly held. Though you will receive relief, your spouse will not unless the case is under Chapter 13. In that case, so long as the debt is a consumer debt and will be paid 100% under the payment plan, the co-debtor will be protected.
Another downside to filing separately is that if you and your spouse own a lot of property together, the property may be included in the bankruptcy estate even if only one party files. That would mean that jointly held property could potentially be liquidated to pay off creditors. In such a case, the filing spouse could have serious impact on the non-filing spouse.
If you are contemplating bankruptcy in the Charlotte area, please call the skilled lawyers at Arnold & Smith, PLLC find additional resources here. As professionals who are experienced at handling all kinds of bankruptcy matters, our attorneys will provide you with legally sound advice for your particular situation.
About the Author
Kyle Frost joined Arnold & Smith, PLLC in 2013 where he focuses his practice on all aspects of civil litigation and bankruptcy, including: Chapter 7, Chapter 11, Chapter 13, home loan modifications and landlord-tenant issues.
Born and raised in upstate New York, Mr. Frost attended the University at Albany on a Presidential Scholarship, graduating magna cum laude with a double major in Political Science and Sociology. He went on to attended Wake Forest University School of Law in Winston Salem, North Carolina.
Following college, Mr. Frost spent over a year teaching English in South Korea. He worked in a private school in Seoul developing curriculum, English programs, and educating both children and adults that were interested in learning a new language.
In his spare time, Mr. Frost enjoys homebrewing, fishing, and travelling.
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