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Joint Bankruptcy: When Does it Make Sense?

If you are married and struggling with debt, you are allowed to file for bankruptcy jointly with your spouse. In most circumstances, since both of your incomes will be considered in the means test, it makes sense for couples to file jointly, thus discharging more debt and potentially keeping more property.

However, there are certain situations where couples need to understand when it’s smart to file jointly and when it would be wise for just one spouse to file.

Which Debts Are You Looking to Discharge?

This is the first question couples should ask themselves. If you file jointly, you and your spouse can get rid of all of your dischargeable debt and begin your fresh financial start. If only one spouse files, only that spouse’s dischargeable debts will be wiped out and the other will be stuck with their own personal debts and any remaining joint debt.

If you and your spouse have a lot of joint debt, it absolutely makes sense to file together to get the maximum benefit. This also makes it so you only have to hire one bankruptcy attorney. However, if you and your spouse have very little joint debt, and only one of you has significant personal debt, there’s no reason to bring both of your credit scores down. In this situation, one spouse should file, while the other spouse’s credit can be used to make future purchases and to help reestablish credit for the bankrupt spouse.

Consider the property you own

When a couple files jointly, the assets and property of both parties are included in the bankruptcy estate. This means all separately owned and jointly owned property. If one spouse files individually, only their property and assets are considered. If your spouse owns a large amount of non-exempt property, your best bet may be to file separately, so as to protect their property, assets and future credit.

Talk to an attorney first

There are many factors to consider when deciding whether or not to file jointly and there’s a good chance that you and your spouse aren’t aware of all of these factors. Before doing anything, speak with a knowledgeable bankruptcy attorney in your area to help you make your decision.

Contact the Law Office of Joel R. Spivack today to discuss your finances and bankruptcy options. He has been helping New Jersey and Pennsylvania residents get back on track financially for over 25 years.