Marriage doesn't create a personal obligation on behalf of both spouses
to be liable for a debt. Liability for credit cards and home loans arises
by agreement and is incurred by those who sign the loan or credit application.
An exception is that the filing of a joint tax return obligates both spouses
for the payment of the total tax due. A creditor with a claim against
a spouse may only collect its debt from the separate property of the spouse.
When it comes to married couples and filing bankruptcy, both spouses do
not need to file a bankruptcy jointly. A married individual may file a joint
or individual bankruptcy case during a marriage or ongoing divorce matter.
However, depending on the type of bankruptcy case, a non-filing spouse
may not be protected from a creditor's collection activities.
If spouses are jointly liable to a creditor, the Chapter 7 bankruptcy of
one spouse does not relieve the other of the obligation to pay the debt.
Thus, a creditor may pursue the other spouse for payment. In contrast,
for debts that are consumer debts to be paid 100% through the plan in
a Chapter 13 case, the co-debtor non-filing spouse is protected by the
co-debtor stay provided by federal law.
Despite only one spouse filing for bankruptcy, the court still considers
household income from both spouses to determine eligibility to file a
Chapter 7 or Chapter 13 case. Thus, in cases where a filing spouse has
less disposable income than a nonfiling spouse, the income of both will
be reported on the "means test."
If household income is more than the qualifying median income required
for filing Chapter 7, the filing spouse may have to file a Chapter 13
case. A Chapter 13 case may protect assets that would otherwise not be
exempt, especially in cases where both spouses have a need to file jointly
because they both have substantial debt.
Financial problems are one of the primary reasons for divorce. While a
Chapter 13 case may facilitate a change in circumstances, perhaps even
divorce, it’s generally unwise to file if the odds are that the
marriage isn’t going to survive.
Many Chapter 13s do not get finished successfully. If a case does reach
completion, dealing with the aftermath may be challenging. As much as
a Chapter 13 bankruptcy filing may help finances, it is a long, arduous,
stressful process that requires some degree of stability and consistency.
If you are married and considering bankruptcy, you must determine which
is best for you: filing a joint bankruptcy or an individual bankruptcy
petition. For most couples, joint bankruptcy will protect more assets
and discharge more debt. The analysis is complicated and necessitates
the assistance of an experienced and knowledgeable bankruptcy
attorney. Filing for bankruptcy is a huge decision that may have both short-term
and long-term financial consequences and effects. Whether you are married
or single, the experienced
South Florida defense attorneys at Loan Lawyers are here to review your potential bankruptcy case. To schedule a free
consultation at any of our three conveniently located offices, contact
Loan Lawyers today by calling (888) FIGHT-13 (344-4813).