How Joint Bankruptcy Works –
If you are married you may be able to save time and money by filing one bankruptcy petition together with your spouse. This is referred to as “joint bankruptcy.”
In a joint bankruptcy, you have to list all debts, PLUS all property, income, and expenses of both spouses. This includes all joint debts you have together as well as debts owed individually by either you or your spouse.
Filing joint bankruptcy can wipe out both spouse’s dischargeable debts, without needing to file two separate bankruptcy cases. However, the types of debts you have – and whether they are joint or individual – will determine whether a joint bankruptcy is in your best interest.
Benefits of Filing Joint Bankruptcy
Filing Joint Bankruptcy Lowers Filing Costs
The bankruptcy filing fee is the same for an individual bankruptcy or a joint bankruptcy. So if two spouses are filing bankruptcy they will save money on filing fees with a joint bankruptcy.
Filing Joint Bankruptcy Lowers Attorney Costs
If two spouses are filing bankruptcy they will save money on attorney fees with a joint bankruptcy, because the attorney is only filing and handling one case instead of two.
Filing Joint Bankruptcy Eliminates All Family Debts
If only one spouse files bankruptcy, the spouse who does not file is still liable for his or her separate debts – as well as their share of any joint debts. But if you file a joint bankruptcy, you will be able to wipe out all dischargeable debts owed by both spouses.
Filing Joint Bankruptcy Saves Time
Filing for bankruptcy involves compile and submitting extensive financial documentation. So, filing jointly is more efficient because you will only need to gather all of the financial documents once.
Disadvantages of a Filing Joint Bankruptcy
When One Spouse Owns Too Much Property
If one spouse owns a lot of their own separate property in just their name, you may not be able to “exempt” (save or protect) all of your combined assets in a joint bankruptcy. So, in this situation, it may be better for the other spouse to file bankruptcy singly – because the separate property of the non-filing spouse will not be part of his or her bankruptcy.
Too Much Priority Debt Owed by One Spouse
Some debts are “Priority Debts” – including certain taxes & child support – and are required to be paid in full in a joint Chapter 13 bankruptcy, even if just one spouse owes the debt. This can result in increasing your repayment plan payment amounts substantially. So if you have income that is not high enough to pay off the priority debts through the repayment plan, an individual bankruptcy by the other spouse might be a better alternative.
Ask Our Attorneys if Joint Bankruptcy is Right for You
The best way to understand if joint bankruptcy or individual bankruptcy is better for you is to consult with our experienced bankruptcy attorneys. We will explain your options, and help you determine the course of action that is best for you