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Pros & Cons: Married Filing Separately

Categories: Chapter 13, Chapter 7, Family Law and Bankruptcy

tumblr_mqt36aMAmv1qhub34o1_540If you are married and considering Chapter 7 or Chapter 13 bankruptcy, you have additional issues to think about. To start, you’ll have to decide which option works best for you: filing a joint bankruptcy or an individual bankruptcy petition. For most couples, joint bankruptcy will protect more of your property and discharge more debts. But not always. And if you are divorcing or already divorced, you should know how bankruptcy will affect things like child support and debts you both cosigned.  Here are my Pros and Cons of being married and filing an individual bankruptcy case.

Pros

  • The non-filing spouse gets their debts discharged like a “free ride” through bankruptcy, without having to participate.
  • The benefit to having only one spouse file bankruptcy is that the non-filing spouse remains eligible to file bankruptcy and can do so during the time her spouse is ineligible because you can only file bankruptcy once every eight (8) years.
  • The non-filing spouse gets rid of debt while maintaining a higher credit score and preserving at least one spouse’s credit score.

Cons

  • The creditors don’t seem to get it right and may go after the non-filing spouse to collect on debt that has been discharged in their spouse’s bankruptcy filing.  Never fear, here in the Central District, we have case law that supports the non-filing spouse.
  • If, and/or when the creditors mess up, then it takes a little effort to get them to stop and cooperate.
  • All of your spouse’s assets and their income are part of the bankrupt estate and must be listed on your bankruptcy papers.

It’s important to explore all of your options for getting out of debt as quickly and economically as possible to begin saving for the important things in life. While it is possible to file an individual bankruptcy case without your spouse, they may still feel the impact of a bankruptcy filing.  A free consultation with a bankruptcy attorney will help clarify your best strategy.

Photo source:  Jimmy Fallon (@jimmyfallon) of The Tonight Show

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