Filing A Joint Bankruptcy: When Does It Make Sense?

Joint Bankruptcy

Filing a joint bankruptcy makes perfect sense when you are married and both you and your spouse have either joint debt or separate debt. Since the means test is going to take into consideration your entire family income, you might as well try to eliminate your entire family debt in one fell swoop. As long as you are married, you can file a joint bankruptcy case and eliminate joint debt as well as individual debt. Much like a joint tax return, the couple can file together with one filing fee, one attorney fee, and one massive amount of federal bankruptcy relief.

Filing Individually

Now many couples do not want to file together. In some situations, one spouse has the majority of the debt and the other spouse is relatively free and clear. In those situations, the spouse who does not maintain a significant amount of debt may be better off not filing. Firstly, you can protect that non-filing spouse’s credit by avoiding the bankruptcy. You can then use that non-filing spouse’s credit when it comes to purchasing a vehicle, purchasing a home, or making any other purchase requiring financing. Now it all depends on how much the non-filing spouse’s debt is in order to determine whether or not it makes sense to not file. As I mentioned previously, a joint filing will encompass all of the marital debt of both parties in one fell swoop. The fact that a bankruptcy case was filed will stay on a credit report for up to 10 years. However, clients have shown that they can rebuild their credit and start to make significant purchases within six months to two years after filing for bankruptcy.

Same-Sex Bankruptcy Filing

What’s interesting to note is that in order to file a joint bankruptcy case in the past, the couple had to be legally married. Since bankruptcy is federal law, a couple can file together if legally married even though the current state they resided in may not recognize same-sex or homosexual marriage. This is an interesting twist from the old law and I have seen it come into play here in the state of Illinois on a couple of occasions. So if you are legally married in any state and you wind up moving to a state that does not yet recognized same-sex marriage, you should be able to file a joint bankruptcy case in that state under federal law as a married couple. I do not believe that US trustee’s office or the bankruptcy trustees or the bankruptcy judges would cause any significant issue in those types of cases.

Find Your Bankruptcy Attorney

If you’re considering a joint filing, remember to research and investigate the right attorney for your case. Make certain that the attorney you hire has significant expertise and experience in the bankruptcy field. Bankruptcy can often be a game of gotcha. What I mean by that is your assets can be taken by a chapter 7 trustee if they exceed the exemption amount allowed in your state. Some attorneys are well-versed on the exemptions. Other attorneys take a very lazy approach and rely on you to know what your property is worth and to know what you’re exemptions are. An excellent attorney will be able to advise you as to what property is protected and as to what property is potentially at risk. The attorney can then go the next step and advise you on how to get yourself in a better position property wise prior to filing. The end goal here is to get you out of debt while allowing you to maintain your property through the process. If a bankruptcy attorney is not well-versed in the exemptions and the property rights of the state, you very well may wind up giving up some property in exchange for your fresh start.

Consider The American Bankruptcy Institute

If you are someone who is struggling financially and considering bankruptcy filing, look for information from reputable sources to help you in your decision-making. You can find a wealth of information at the website of the American bankruptcy Institute. The American bankruptcy Institute, also known as the ABI, is an organization that is made up of all types of different players involved in the practice of bankruptcy. The membership includes consumer bankruptcy attorneys, business bankruptcy attorneys, creditors, trustees, judges, finance companies, and many other tangent resources or persons involved in the bankruptcy process. The organization provides a membership list which you can download. You can then contact ABI members in your local area to get the best advice. And a word of caution: don’t file a bankruptcy case with the cheapest attorney you can find in your local area. File with an experienced, knowledgeable attorney who can take you from point A to point B with the least amount of turbulence. If you’re struggling financially, you only want to file bankruptcy once. You want that experience to be as simple and as smooth as possible. If you utilize the ABI to help you locate attorneys in your area, you have a greater chance of success knowing that the attorney that you’re going to hire is fully engage in the practice of bankruptcy law.

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