As a married couple you’ve got the option of going it together when it comes to bankruptcy. Joint bankruptcy happens to be one such thing that you can file together as a married couple. However, there’s a flip side involved in this story as well and that includes specific circumstances wherein it becomes harder for you to qualify for Chapter 7 bankruptcy or for that matter protect all of your property.
What happens when you file bankruptcy as a married couple?
Filing bankruptcy as a married couple comes with its own set of benefits. Read on to find out more.
1. It’s far more convenient: Filing bankruptcy as a married couple helps a lot for it can make the entire process far more convenient. Joint bankruptcy makes things so much more convenient simply because of the fact that you get to wipe away all your debts together and that too through a single bankruptcy. Moreover, for a joint bankruptcy as a married couple you don’t even need to attend separate hearings.
2. You save money: When it comes to filing joint bankruptcy, then it also saves you money for the court filing fees happen to be the same both in case of individual as well as joint bankruptcy. Then again, it’s a known fact that the bankruptcy attorneys will charge a lot less for a joint bankruptcy as compared to 2 individual bankruptcies. This would only be applicable if you choose to hire a bankruptcy attorney. It’s obvious since there’s less work involved for the petition as compared to 2 bankruptcy filings.
Filing bankruptcy to pay off debt as a married couple has certain difficulties involved as well.
1. Qualifying for Chapter 7 becomes difficult: As a married couple filing bankruptcy, you need to first pass a means test if you’re looking to qualify for Chapter 7. This bankruptcy test essentially involves comparing your income against the median income for a similar kind of household in your state itself. Now if the results show that your income falls below median, then you’ll qualify automatically. On the other hand, if it happens to be above median, then you’re required to disclose all your expenses on this means test so that you manage to qualify.
2. It gets harder to protect all your property: Going by Chapter 7 exemptions, you’re definitely allowed to keep some of your property. Now what you should know is that being married and filing a joint bankruptcy entails certain states allowing you to double up the amount of your exemptions. This would be taking into account the fact that 2 people generally own more property as compared to a single person. However, there are some states which don’t allow married couples to double up their exemptions in spite of filing for a joint bankruptcy. Actually it’s been mostly seen that it’s only about slightly higher. This again goes on to indicate that even in case you go ahead and file an individual bankruptcy leaving aside your spouse, even then you might not be able to exempt all property owned between you and your spouse.
Well, though the above discussion holds true and you might base your decision accordingly, yet it’s also a fact that being married doesn’t make it mandatory to file bankruptcy together. In case it’s only one of you who’s in debt, then there’s simply no need for the other to file bankruptcy. However yes, fact remains that the non-filing spouse is still required to disclose his or her income during the bankruptcy proceedings. If you both are in debt, then joint bankruptcy might just prove a better option ultimately.