Under bankruptcy law, married couples can file a joint bankruptcy petition. But, it is not typically the best option for many couples. Sometimes, it makes sense for married couples to file for bankruptcy jointly. However, it can be hard to do since both spouses must include their income in the individual bankruptcy.
On the other hand, Joint Bankruptcy filing for couples has benefits and drawbacks. With this, you will learn about filing bankruptcy together is good or bad.
Benefits of filing for bankruptcy together
When two people file a joint petition, the couples can wipe out their joint debts, which are the ones they are both responsible for paying. They can also save money by filing a joint petition. The filing fees for joint and individual bankruptcy cases are the same. However, you will pay the same amount if you file two separate cases. And most bankruptcy lawyers also charge the same amount for couples.
Also, it saves a lot of effort and time when married couples file jointly. They only need to complete one petition, and all of the creditors must attend the same creditors’ meeting. It also eliminates the need for hearings and allows the bankruptcy court and the trustee to resolve property issues quickly.
The Drawbacks
Some states do not allow joint bankruptcy filings. This means that you will need to protect both your assets and liability in order to avoid foreclosure. Depending on your state laws, it might not be possible to protect as much property as one spouse. For instance, if one spouse has multiple non-exempt assets, it will be lost in bankruptcy, and the two of them will have to pay for them through a repayment plan.
If the debts are in only one person’s name, then filing a joint bankruptcy is probably not the best idea. It can affect one’s credit rating and limit one’s ability to borrow.
Should you file bankruptcy together with your Spouse?
Joint bankruptcy is a type of bankruptcy that couples can file together. Although it is often the right move for one partner, the other spouses may not want to participate in the bankruptcy. It is possible for a spouse to file for bankruptcy separately to keep their debt-free partner out of the court system. However, it is imperative to note that filing for bankruptcy only lasts for a limited time of ten years and that a good credit rating is still maintained.
The convenience of filing bankruptcy with your spouse is, if you file a joint bankruptcy, you and your spouse will only need to provide one set of bankruptcy documents to the hearing. It saves you time and helps minimize the amount of paperwork involved in bankruptcy.
Although credit reports will typically reflect the bankruptcy, most people’s scores will increase after the filing of a joint bankruptcy. Generally, if both of you have good credit, then it is in your best interest to file for bankruptcy together.