Many people don’t know that they do not have to file bankruptcy with their spouse. You can file it on your own, and there are many times when it’s advantageous to do so.
Filing without your spouse can introduce many complications to your bankruptcy case, and you will need an attorney to navigate them effectively. Nevertheless, to give you a brief overview of how it all works, here are a few of the most frequent questions people have about filing without their spouse.
Who owns the debt?
Filing alone is most advantageous when most of the household debt and any assets attached to that debt originated prior to the marriage. The debt may be putting a budgetary strain on both partners, but legally it only belongs to one of them.
You must be careful to correctly identify non-marital and marital debts before deciding to file jointly. While the co-debtor stay will give your spouse a break from the creditors for awhile, the courts will not discharge any debts owed by the both of you. The creditors will be free to go after your spouse for the debt, putting you and your spouse back where you started.
Where do most people get this wrong? By assuming it’s about the name on the bill. The bill being “in your name” doesn’t matter nearly as much as whether or not the debt was created after the marriage began. New York law assumes you both benefited from purchases made with debts incurred after the marriage.
What happens to your spouse’s credit?
Your spouse’s credit shouldn’t be impacted as long as you don’t have joint debts. If you do, the fact that you filed for bankruptcy will show up on your spouse’s credit report.
Again, this is a scenario where it’s very helpful to have an attorney look over your list of debts in order to determine whether you’re better off filing jointly.
Which Chapter should you file?
Your spouse’s income gets considered both for the Bankruptcy Means test (which determines whether you can file Chapter 7) and for the Chapter 13 repayment plan.
Both your assets and your spouse’s assets come under consideration when calculating bankruptcy exemptions, which allows you to keep a portion of your property in a Chapter 7.
Assets your spouse owned prior to the marriage would be exempt property.
All of these details can become complex and tricky very fast.
You should never attempt to file bankruptcy on your own. Get expert advice from an attorney who can help you navigate the process. For example, some of your property could be in a legal grey area, like a credit card that you obtained prior to the marriage but ran up debt on after the marriage.
Want to get a look at your unique situation? Contact us for a free consultation today. Together we can find the best road to your financial freedom.
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