Your Bankruptcy Doesn’t Have to Affect Your Spouse
Your Bankruptcy Doesn’t Have to Affect Your Spouse
When you are facing the reality that bankruptcy is your best bet to discharge overwhelming debt, you may find yourself worrying about what that will look like for your spouse. Luckily, just because you are filing bankruptcy, doesn’t mean your spouse has to as well. It is true, you and your spouse can make the decision to file separately. This decision is important, as it can determine how your debt is discharged.
Why File Bankruptcy Jointly?
All debts and assets of both you and your spouse are disclosed in the bankruptcy when you file together. When filing jointly, all the debt is bundled together. This makes the process simpler if both you and your spouse have debt. Filing together can seem like an obvious answer, especially if both you and your spouse have incurred debt, either together or separately, but it is far from your only option.
Why File Separately?
What If Only I Have Debt?
If you have debt and your spouse does not, it can be a easy decision to keep your spouse out of the bankruptcy. When your spouse is not a part of the bankruptcy, you can do things like save 50% of your tax refund if you filed your taxes jointly. You can also protect assets that are in the name of the non-debtor.
What If We Both Have Debt?
What you may not know is that even if you both have debts, it can benefit you to file separately. If you have a lot of debt, a chapter 7, or liquidation bankruptcy, may sound like the best option as it discharges the debt, rather than putting it into a payment plan.
Unfortunately, The trustee has the right to sell any assets and utilize the proceeds to pay off creditors due to the nature of a chapter 7. This means you could lose big assets like your home. However, if the spouse whose name is on the house files a chapter 13 while the other spouse files a chapter 7, you can get benefits of both bankruptcies. In your Chapter 7, the debt is discharged. Meanwhile, in your spouse’s Chapter 13, your home is protected and their debt is placed into a payment plan.
Talk to an Attorney About Your Options.
Thinking of filing bankruptcy but nervous about how it’ll affect your spouse? Your best option is to speak with an experienced attorney about your options. Call The Law Offices of Dax J. Miller today and schedule your free phone consultation! We can help you find out what works best for your situation.
