My spouse is declaring bankruptcy, should he/she file alone or together?

As the economy continues to spiral downwards, the number of individuals filing for bankruptcy will continue to rise. Over the last 20 years the divorce rate has risen to over 50% of marriages that are failing. This means these that there is a good chance that most people that are currently married are probably in a second or third marriage. When coming into a second or third many individuals are carrying financial baggage. Many spouses don’t even find out about this baggage until after they are married. This poses a problem when one of the spouses has terrible credit and is buried under a mountain of debt. The other spouse doesn’t want to be brought down in future purchases in the new marriage and decides to consider filing bankruptcy to wipe out the past debt.

This is a common question that a bankruptcy attorney would get from a potential client. A person in this kind of situation might come in and ask, my spouse is declaring bankruptcy, should he/she file alone or together? This question can be complicated depending on how intertwined the couple’s finances are at the time of filing bankruptcy. If everything has been kept separate, this should be no problem with having the one spouse filing bankruptcy separately and leaving the other spouse out to protect their credit. If the couple now owns a home together, the bankruptcy attorney will list the value of the property at 50% of the value because only one spouse is filing for bankruptcy.

There are some problems that can occur for the bankruptcy attorney when attempting to qualify to file Chapter 7 bankruptcy. Even though only one spouse is filing bankruptcy, the bankruptcy attorney will have to include the income of the household including the other spouse. If the spouse with good credit, that doesn’t want to file, has a job that makes a large income they could pose a problem when trying to qualify to file Chapter 7 bankruptcy. When qualifying for Chapter 7 an individual must take a means test which takes a six month look back period. The look back timeframe starts the month prior to the bankruptcy filing and goes back six months then is divided by six and multiplied by 12 to get the average annual income. Where it goes south for some couples, is when their combined income is more than the average median income for their state. All of this can many times be manipulated by just moving the bankruptcy filing date to help lower the overall income. This is once again a good reason to have a bankruptcy attorney protecting the debtor and working in their best interest.

Getting answers to those tough bankruptcy questions needs to be thought of before you make a decision when it comes to your financial problems. Finding the answers to help you understand your situation more clearly can help you make an informed decision about filing bankruptcy. Take a minute to call or fill out the form to have a FREE NO OBLIGATION CONSULTATION with a bankruptcy attorney in your area.