Personal financial decision making in regard to declaring bankruptcy may be a difficult and circumstantial matter. When a bankruptcy is being considered by some ones, they often always ask a question of whether they can file individually along with their spouse. The U.S. answer is yes, joint bankruptcy may be filed by one spouse without involving the other party. On the other hand, this solution has to be evaluated really carefully and you have to know all the consequences it can cause.
Understanding Bankruptcy
The bankruptcy is a legal procedure which an individual and business disburden themselves from debt through financial relief. It is a new opportunity for a person to draw up the items or value that s/he owes his creditors but claims done under bankruptcy court privilege.
The two bankruptcy chapters, Chapter 7 and Chapter 13, are the most used type of bankruptcy filing in the United States, among the several filed by individuals. A company under Chapter 7 bankruptcy process is required to get rid of its assets to pay off creditors while in Chapter 13, the creditors are given time usually of between three (3) and five (5) years to clear their debts.
Marriage and Bankruptcy
The introduction of marriage brings some complexity to the bankruptcy proceedings, but especially true in community property states. In community property states, including California, Texas, and Arizona, it is likely that the couple are the co-owners of joint assets, even though the amount one person has contributed toward the assets is significantly higher than that of the other. Thus, debt that is entered during the marriage may be regarded as the joint obligation for both the spouses even if just one of the spouses is on the contract.
Nevertheless, in the states of community property such as New York and Florida, properties and debts acquired during the marriage may be regarded individually with each spouse being accountable only for the properties he or she brought into the marriage, and any other assets acquired by the other partner during the marriage time. Here, either spouse can have a debt without the other spouse’s name in it. There, the debt is seen as not one but two owing obligations and must be covered by both parties while filing the bankruptcy.
Can One Spouse File Bankruptcy?
One of the common situations when only one spouse obviously is having a financial problem is when he or she could get our of bankruptcy without filing the case jointly. This provision can serve the purpose to shield the other spouse’s credit score or to start a new financial life from scratch if their finances are not stable.
Only in case when one of the spouses filing for a bankruptcy without the other spouse, the process just influences the individual’s credit and property. Concerning the non-filing partner whose assets get the same status quo the same as before the debt was filed, the debt must not be jointly held.
Considerations Before Filing Individually
Before proceeding with an individual bankruptcy filing, there are several important considerations to keep in mind:
Joint Debts: When only one of you files for bankruptcy, then the non-filing spouse can still be held accountable for beforehand debts like the mortgage, car loan, and others. Hence, the creditor is empowered to sue the non-filing thousand for repayment, even though his mortgage obligation is discharged via the Bankruptcy.
Income and Expenses: However, when filing the Chapter 7 bankruptcy, the general rules are that the combined income and expenses of both spouses may be considered, whether one or both filers choose to file for it. This may require additional documentation to somewhere describe the evidence of the overall monthly income and expenses that prove the individual is not able to afford on his own.
Asset Protection: Whether this is going to be the case regarding the state laws and the exemptions provided or not, there are chances for individuals to save some assets from being liquidated during bankruptcy. Meeting, possibly several times, with an experienced bankruptcy attorney is the best way for you to learn which assets could be in jeopardy and how to most fully safeguard you from bankruptcy.
Credit Impact: Bankruptcy filing though can take off all your financial challenges and pressure but then it can affect your good credit. Nevertheless the impact on the borrower might be different when it comes to his/her credit history and specific conditions.
Seeking services of a Bankruptcy Attorney will be advisable
Making their way through bankruptcy process may get hard and confusing under such conditions as when you consider it from the point of view of both spouses. Before the actual filing of bankruptcy as an individual please get a approach to your bankruptcy lawyer or others that have similar qualifications in order to get sound and specific advice about you particular situation.
Filing for bankruptcy will be executed best with the assistance of a competent and good bankruptcy attorney. She will tell you about your choices, do an assessment on choices you picked, and guide you in all legal procedures involved. Moreover, they are capable of offering the best support through asset protection, building their connections with creditors and later in post-bankruptcy financial planning.
Ultimately, demonstrates also that an American spouses single can be filed for bankruptcy without a partner, but it is necessary to adequately understand the complications and obtain the advisory help prior to the act. Awareness of where your rights and responsibilities lie and having a broad range of options available to you will empower you to make proper choices necessary to achieve financial and personal well-being through this journey.
