This post lists three things you should know if you want to file for bankruptcy without your spouse. Contact Phoenix Law for more information today.
Using bankruptcy to help you get out of debt is something you could consider if you are overwhelmed with bills you cannot pay. If you are married, but you are considering filing individually, without your spouse, here are some of the main factors you should know before you sign the bankruptcy documents.
1. You Can File Individually If You Are Married
Married couples have the freedom to file for bankruptcy together or individually. Couples typically file together when they have joint debts, but spouses can file by themselves if they choose to.
There are several reasons a spouse might want to file individually, and you might have your own reasons. For example, if you want to buy a house in the near future, you could prevent damage to your spouse’s credit if you file individually, and put the house in only your spouse’s name.
If both spouses want to file for bankruptcy, it is always better to file jointly. By filing jointly, you can pay just one filing fee and one fee for the legal assistance from a lawyer.
However, it is important to understand how filing individually could affect your spouse, and you can find out more about this by meeting with a bankruptcy lawyer.
2. Joint Debts Do Not Get Fully Discharged
One of the main topics the lawyer will discuss with you involves the issue of joint debts. Do you and your spouse have debts you cannot repay that are in both of your names? If so, these are called joint debts because you both owe the money.
If you and your spouse have joint debts, the main thing you should know is that while bankruptcy could discharge the debts for you, your filing alone would not cause the court to discharge the debts from your spouse. In other words, the creditors can pursue your spouse for the money owed after you file bankruptcy individually.
On the other hand, if your debts do not include your spouse’s name on them, they are individual debts. If these debts qualify for discharge through bankruptcy, the creditors could not pursue collections for them from your spouse, simply because his or her name is not listed as a debtor on the bills.
3. Your Spouse’s Income Counts
One other important factor you should know is that your spouse’s income counts even if he or she does not file with you. Income is an important factor in bankruptcy, and it dictates which branch of bankruptcy a person qualifies for.
If a person’s income is below a certain amount, he or she can use Chapter 7, which offers forgiveness of debt and uses your property to repay some of the debts. If a person’s income is above a certain amount, he or she will most likely qualify for Chapter 13 bankruptcy, which requires repayment of some or all of the debts the person owes.
When you meet with a bankruptcy attorney, they will ask you about your income and your spouse’s income. Because both of you live in the same house, both incomes count when the court evaluates the person’s eligibility for bankruptcy. You should bring your own pay stubs and your spouse’s pay stubs to your bankruptcy appointment for this reason.
With this information, your lawyer will complete a means test which will reveal which branch of bankruptcy you qualify for based on income alone.
While you can file for bankruptcy individually if you are married, you should find out from a lawyer whether you should do this or file jointly. You can learn more about bankruptcy by contacting Phoenix Law. We offer bankruptcy services and can give you advice for your unique situation.
With our offices centrally located in Livonia, we represent clients throughout Metro Detroit and beyond, including Westland, Garden City, Wayne, Redford, Belleville, Farmington Hills, Plymouth, Canton , Taylor, Romulus, Northville, Commerce Township, Wixom, Dearborn, West Bloomfield and Detroit