Bankruptcy For Married Couples

If you or your spouse is carrying a significant amount of debt and are thinking about filing for bankruptcy, you likely have many questions. Should you and your spouse file bankruptcy together? Can you file for different types of bankruptcy? If only your spouse files bankruptcy, how will it affect you? What type of bankruptcy should you file? Below, one of our Fort Lauderdale bankruptcy attorneys explains more about filing bankruptcy as a married couple.

If Married, Do Both Parties Have to File for Bankruptcy?

Federal law allows married couples to file for bankruptcy either separately or jointly. This means that you or your spouse can file for bankruptcy without the other, or you can file together as a married couple. Determining which option is right for you is not always easy and it largely depends on the facts of your case and your situation.

Whether you file jointly with your spouse or separately will also largely depend on the type of bankruptcy you want to file. A Chapter 7 bankruptcy allows you to discharge most or all of your debt. This type of bankruptcy is also known as liquidation bankruptcy because a portion of your assets may be sold during the process to help repay a portion of your debt. Florida has many property exemptions. They are some of the most generous in the country, and these can help you keep your assets.

To file Chapter 7 bankruptcy, you must pass the means test. This essentially means proving that you do not have sufficient income to cover your debts. If you cannot pass the means test, you will have to file Chapter 13. During Chapter 13 bankruptcy, the majority of your debts are not discharged, or eliminated. Instead, they are reorganized into a repayment plan. These repayment plans can extend between three and five years, which can make your debt more manageable to repay.

Benefits of Married Couples Filing Bankruptcy Together

Generally speaking, it is recommended that most couples file bankruptcy together. Filing jointly has many benefits and they are as follows:

• More efficient: When filing jointly, both spouses can discharge or reorganize their debt in the same proceeding. One attorney can also represent both spouses, the spouses will attend the same court hearings and meetings of the creditors, streamlining the process and making it more efficient. Filing jointly can also be faster, as only one case has to be resolved instead of two.
• Cost savings: When two spouses file separately, it is also usually more expensive. You will have to pay two attorneys separate fees, and you will also have to pay the filing fees twice.
• Discharge all debts: By filing jointly with your spouse, you can eliminate all debts regardless of whether you incurred them as a couple or individually.
• Maximize exemptions: There are different limits placed on the exemptions available in Chapter 7 bankruptcy. Many exemptions have different limits for married couples, and these are higher than the limits for individual filers. By filing jointly with your spouse, you will have access to to the higher exemption limits.

Drawbacks of Filing Bankruptcy with Your Spouse

While there are many benefits of filing jointly with your spouse, there are possible drawbacks, as well. These include:

• Means test eligibility: You and your spouse will both have to pass the means test when filing jointly. The means test went into effect in 2005 in order to ensure that filers are not abusing the system and that they do not have enough income to cover the debt. When filing jointly, the income of you and your spouse are considered in the means test, which could make you ineligible. In these cases, it is usually best for the two spouses to file separately, or for one spouse to stay out of the bankruptcy case altogether.
• Impact on one spouse’s credit: There are times when one spouse has incurred a significant amount of debt but the other has not. In these instances, if both spouses file jointly, it will impact both of their credit scores. The spouse who has not incurred debt may want to avoid this negative impact and so, stay out of the bankruptcy case.

Other factors can determine whether you should file separate or joint bankruptcy. It is important to work with a Fort Lauderdale bankruptcy attorney who can advise on which option is right for you.

Can One Spouse File Chapter 7 and the Other Chapter 13?

One spouse can file Chapter 7 while their partner files Chapter 13 bankruptcy.  There are times when it is beneficial for two spouses to file different types of bankruptcy and they are as follows:

• One spouse has incurred significant credit card debt but their partner is behind on child support or has substantial back taxes. The spouse with credit card debt may choose to file Chapter 7, while their spouse files Chapter 13 to repay the debt over time.
• One spouse has an auto loan with a high interest rate, which can be changed during Chapter 13 but not in Chapter 7.
• One spouse owns a home without equity but with certain liens, which can be eliminated in Chapter 13 but not in Chapter 7.

Can a Husband and Wife File Separate Bankruptcies?

Again, a husband and wife can file separate bankruptcies, but that does not mean it is always the best option. It is always important to speak to a Fort Lauderdale bankruptcy attorney who can review the facts of your case and help you determine whether it is better to file separately or jointly.

Contact Our Florida Bankruptcy Attorneys for Help

If you and your spouse have significant amounts of debt, you likely have many questions. At Loan Lawyers, our bankruptcy attorneys in Florida can provide the legal answers you need, advise you of your options, and help you determine which one is right for you. Call us today at (954) 523-4357 or fill out our online form to schedule a free consultation and to get more information.