The decision to file for Chapter 7 bankruptcy can be difficult. In some cases, a married couple might decide that only one member of the couple will file bankruptcy. Knowing how intertwined a married couple's finances can be, read below to find out how things might go when one party only files for Chapter 7 bankruptcy.
It can be better to file jointly, in some cases, but there is no requirement that both parties file bankruptcy together. One party can file, and then the other can file separately. Talk things over with a bankruptcy lawyer before you decide. They can advise you about the benefits and the potential pitfalls of each option.
Exemptions allow filers to hold on to their personal assets. They provide either the total exemption of an asset like heirloom jewelry, or they provide a dollar amount that can be deducted. For example, your state might allow you to deduct $25,000 from the value of your home. An important aspect of exemptions to understand is the ability for some filers to double their exemptions if they file bankruptcy jointly. The above example of the home exemption would become a $50,000 exemption. Not all states offer this perk, however.
Another issue to discuss with your attorney is the way your state handles property owned by married couples. You either live in an equitable distribution state or a community property state, and the way your assets are dealt with bankruptcy can vary with those provisions.
Marital Debts and Bankruptcy
Not all debts are marital debts. If the debt was initiated prior to the date of the marriage, that debt is a separate debt. Only the holder of the debt is responsible for it. Things get trickier when it comes to marital debts. Joint debts are handled like marital property — in accordance with community property or equitable distribution laws. For instance, a joint debt in a community property state is divided evenly, and the party that files bankruptcy is the only party to get debt discharge.
The Effect On Credit
Going forward, a bankruptcy filing could impact the way you are approved for future debts. Only the party filing for bankruptcy is affected, however. This is an important consideration for couples that have a lot of separate debt as it preserves the credit score of at least one of them. The way a bankruptcy filing affects you and your spouse varies greatly, and you will need to speak to a bankruptcy lawyer from a firm like Havner Law Firm before you make the decision.
After being involved in a serious auto accident with a drunk driver, I struggled heavily with getting the driver's insurance company to open a claim. When the insurance company started pushing back, I knew I needed to do something. I spent a lot of time digging through the laws surrounding auto accident claims so that I knew what my legal rights were. I even talked with an auto accident attorney. I created this site to teach others about what I learned, including my court experience. I hope it helps you to determine how you should proceed with your auto accident case.