Do Both Spouses Need to File for Bankruptcy Together?
Many marriages struggle with financial problems, and debt is a frequent conflict in marriages throughout Florida. Indeed, according to a report from CNBC, more than 50 percent of married couples consider divorce because of a spouse’s debt, and when married couples share a substantial amount of debt, that debt often leads to disagreements and deep problems within the relationship. For some of these married couples, filing for bankruptcy may be able to offer a fresh start. Yet understanding how bankruptcy in a marriage works can be complicated. For example, do both spouses have to file for bankruptcy? Is it possible to file a bankruptcy petition together jointly? And what are the benefits and limitations to a joint bankruptcy filing?
Consider the following information from our West Palm Beach bankruptcy lawyers.
Both Spouses Do Not Need to File, But Both Incomes Will Be Considered
Under US bankruptcy law, both spouses in a marriage are not required to file for bankruptcy when one of the spouses plans to file — even if the spouses are planning to stay married and continue sharing a residence, certain financial obligations, and a broader life together. In short, one spouse may file for bankruptcy individually, and the other spouse does not need to file. In these circumstances, the spouse who is not filing will not experience the impact to their credit that the filing spouse will experience. Likewise, the spouse who is not filing will not have to contend with the liquidation of non-exempt individual assets if their spouse files for Chapter 7 bankruptcy.
However, complications can arise in some cases for the spouse who plans to file, especially if the spouse who wants to file for bankruptcy plans to prove eligibility for a Chapter 7 filing. Both spouses’ incomes will be taken into consideration, so it may be necessary (depending on the non-filing spouse’s income) for the filing spouse to file for Chapter 13 bankruptcy based on eligibility factors. There are, however, marital adjustment deductions, that can still allow the filing spouse to qualify for Chapter 7.
Joint Filing is Possible
If both spouses want to file for bankruptcy, it is possible to file just one bankruptcy petition that will be a joint petition. There are benefits to filing a joint petition, including lower filing costs, limited attorney fees, and the doubling of certain bankruptcy exemptions.
In general, if both spouses do plan to file for bankruptcy, a joint petition will usually make the most sense. However, there are exceptions. If the spouses are planning a divorce, for example, and to file for Chapter 13 bankruptcy, a bankruptcy case that will last from three to five years can complicate plans for a divorce.
Contact a West Palm Beach Bankruptcy Lawyer Today
If you are married and have questions about how your marital status will impact your bankruptcy case, it is important to seek advice from an experienced West Palm Beach bankruptcy attorney at Kelley, Fulton, Kaplan & Eller. Get in touch with our firm today to ask any questions and to begin working on your bankruptcy petition.
Source:
law.cornell.edu/uscode/text/11
