Should I File Individual or Joint Bankruptcy?

If you are married and suffocating under impossible debt, you may be considering filing for bankruptcy. It can be a complicated question with a number of sub-issues worth investigating before progressing too far.  One such issue is whether you should file jointly with your spouse, file two separate bankruptcies, or have just one of you file. Your specific circumstance will lend itself to the best answer.

Jointly Owned Property 

It’s worth knowing that when spouses hold joint property, it is recognized to be Tenancy by the Entirety in most situations. That means it is protected from bankruptcy when just one of the spouses files for bankruptcy if there are no other joint unsecured debts.

 Filing Jointly: The Benefits 

A joint filing will be less expensive, making that one key advantage to filing jointly. And because many loans were taken out jointly, in some instances both spouses will be forced into bankruptcy through default. The entire process is more efficient than having two separate filings, which will incur double the filing and attorney’s fees.

Another nice benefit is the debt is all discharged at once, instead of having to figure out who owns which debt, everything is taken care of in a single meeting.

Finally, a joint petition provides more generous exemptions, shielding more assets from creditors.

For couples who do not own a home and cannot take advantage of the homestead exemption, wildcard exemptions are doubled, meaning $8,000 of personal property can be exempted. For those taking advantage of the homestead exemption, individuals get an additional $1,000 in personal exemptions, whereas couples get double that.

Filing Jointly: The Drawbacks 

When filing for Chapter 7 bankruptcy, a means test determines whether debtors really do have insufficient funds available to pay off their existing debts. If their joint income is too high, they may have to file as individuals, or may have to settle on just one person filing.

In the event one of the individuals has the majority of the debt in their name, it may be a good idea to preserve the other’s credit rating by keeping them out of bankruptcy.

If either of the spouses has a substantial amount of property that is owned separately, they would be able to protect that property by staying out of the bankruptcy.

 The Best Move For You

It goes without saying that filing for bankruptcy is a stressful experience. There are many technicalities involved that the typical layman may not understand. That’s why having the experienced Miami bankruptcy attorneys at The Law Office of Julia Kefalinos advocating for you is the best way to get started.  We will take the time to make sure you are comfortable in understanding your options and ready to proceed in the best direction for you. Schedule a confidential consultation in our office today.

Source:

govinfo.gov/content/pkg/USCODE-2010-title11/pdf/USCODE-2010-title11.pdf