Marriage comes with plenty of benefits and surprisingly enough, one of them is that you have the ability to file for bankruptcy together. This can save both money and time since you will be filing a single bankruptcy petition together, as opposed to each filing separately.
As with anything though, there are pros and cons to choosing to file a joint bankruptcy petition. But before those get highlighted, let us look at what exactly a joint bankruptcy petition is.
When you and your spouse choose to file a joint bankruptcy it means that you two will file a single set of bankruptcy papers with the court. Your petition will disclose all debt, income, property and expenses between the two of you. It is important to note that all debt and property, whether owned individually or together, must be disclosed when filing.
Filing jointly carries the following pros:
Efficient – filing jointly means only gathering all necessary documentation once and attending all hearings together. This is vastly more efficient than each having to do it separately.
Lower costs – the cost to file jointly or individually remain the same regardless, meaning you will save a lot of money on filing fees and attorney fees by filing together instead of separately.
Double exemptions – the state of New Jersey allows you to use federal bankruptcy exemptions. Choosing to do this means you could double the amount of your exemptions by filing a joint bankruptcy petition.
Rids of all dischargeable debts – filing a joint bankruptcy gives you the ability to wipe out all dischargeable debts owed by both you and your spouse. If you choose to file separately or just one files, the non-filing spouse usually ends up liable for their separate debts and share of joint debts.
Clearly, there are many benefits to filing together as oppose to individually. Still, it is important to know all the variables that factor into a joint bankruptcy petition. The following are a couple cons when it comes to filing jointly:
You own too much property – when one spouse owns too much separate property you may not be able to exempt your combined assets with a joint bankruptcy petition. Filing separate would help in this case because the non-filing spouse’s property will not be part of their bankruptcy.
You have a lot of priority debt – in a Chapter 13 bankruptcy priority debts must be paid in full even if those debts belong to only one spouse. This would considerably increase your payments considerably, which can be a disadvantage if your income is not high enough to meet those payments.
Choosing to file for bankruptcy is a big decision, whether jointly or individually. The process is extensive and knowing what you are getting into is an important aspect of bankruptcy.
It is important to have an experienced bankruptcy attorney to help you with the bankruptcy process. New Jersey bankruptcy attorney Joel R. Spivack, Esq., can help you and your spouse decide which type of bankruptcy suits your financial needs.
For a free face-to-face initial consultation, call today at 856-488-1200.
The articles on this blog are for informative purposes only and are no substitute for legal advice or an attorney/client relationship. If you are seeking legal advice, please contact our law firm directly.