A couple that has recently gotten married and is seeking to file for bankruptcy may be facing some different options than if they were filing on their own. The option to jointly file for bankruptcy can make a positive difference, but being married can also affect Chapter 7 bankruptcy filings and make it harder to protect some property.
Should we file together or separately?
One of the main benefits to filing a joint bankruptcy petition is the fact that it allows the couple to eliminate all of their debts together.
In addition, the bankruptcy court is the same for a single or a joint filing, so it allows a couple to avoid paying double the costs for the same filing.
Joint petitions may also be better if the couple chooses to hire a bankruptcy attorney since they will not have to do the work of two separate petitions in their filing.
When Joint Filing Isn’t Right for You
However, depending on the income, assets, and debts of the couple, a joint filing may not always be in their best interest. There are two main considerations that a couple must pay attention to before making any decision regarding their bankruptcy options.
A couple must consider the following when filing:
- Marriage can make a Chapter 7 bankruptcy filing more difficult. Qualifying for Chapter 7 bankruptcy means passing a means test. This compares the income of the filer with the average income in Texas. If the income is above the median, the filer will have to disclose their expenses to determine if they qualify. A married couple must include both incomes, even if they are filing for one person. This can put the average income of the filer over the median income, even if they personally don’t make enough to cover their expenses.
- Marriage can make protecting property difficult. Chapter 7 bankruptcy exemptions allow someone to keep a certain amount of property. A couple that files jointly may be able to double the amount of the exemption to account for double the property. Depending on the property that needs to be exempted, filing separately can allow each spouse to protect more of their own separate property in the process.
Just because a couple is married does not mean they have to jointly file for bankruptcy, especially if only one person is facing bankruptcy. While the dual income must be reported, the spouse that is not filing does not need to be a part of it and their separate property should not be affected in the filing. Joint property, however, may be seized by bankruptcy trustees to pay off debts.
If you are wondering how your marital status affects your bankruptcy filing and what your best options for filing may be, contact us today. Dethlefs Pykosh & Murphy is backed by over a decade of experience!
