Chapter 7 Bankruptcy Filing – Married Or Separate?
Millions of Americans consider filing for bankruptcy each year. With unemployment at record highs and people being under mountains of debt, close to 1.5 million are expected to file for bankruptcy in 2011. There are many reasons why families and individuals need to file for relief to get out of debt. In the last few years many have lost their jobs, and because of the economy, it’s next to impossible to find a job to replace it. Being faced with this situation, it’s impossible for those to keep up on their bills. The bankruptcy laws were created to help good people that got caught up in an unexpected circumstance, and allow them to have a second chance by removing their debt. Today, many Americans suffer from various reasons of job loss, all the way to getting caught up over spending, and end up upside down because of the large amount of available credit. Whatever the reason, bankruptcy will help these families get a fresh start.
When filing bankruptcy, married couples usually ask their bankruptcy attorney if it’s possible to file single to try and save the other one’s credit. Couples have the perception that their family will need credit to survive, and unless one of them stays out of the bankruptcy, it’ll be impossible to get credit. The benefit of the bankruptcy’s fresh start would be downgraded if one’s spouse stayed out of the bankruptcy. The spouse that stays out of the bankruptcy will end up having to make payments on their share of the old community debts. As shown in the past, this can also cause a rift in the marriage because they are no longer sharing financial responsibility. Unless your bankruptcy attorney thinks it’s in your best interest to file separately, it’s always best to file jointly wiping out all of the debt. After the bankruptcy filing, as long as a substantial income continues to come in, credit should come back quickly.
The current monthly income is what is used to qualify for Chapter 7 bankruptcy. If a married couple files separately the CMI is still based on the household income. In other words, if the couple is working, the current monthly income to qualify for Chapter 7 will be based on the combination of their wages anyways. This is another reason why it doesn’t matter that filing bankruptcy separately will benefit a married couple. This is important information to discuss with a bankruptcy attorney. There are different periods of time that might benefit the couple filing based on when their combination of wages are the lowest.
No one really wants to file for bankruptcy. The idea that filing bankruptcy is a last resort is no longer good advice. Some people wait too long to consult a bankruptcy attorney about filing. In many situations they can save their home or their retirement account if they were just more proactive. There are individuals that have lost their job and go through their entire pension paying their credit card debt hoping they’ll get another job. These people could have saved their retirement account, as it’s protected, if they had been more realistic with their financial situation. Don’t wait until all your resources are gone, consult with a local bankruptcy attorney and see if filing for bankruptcy will work for you.