When is Filing for a Joint Bankruptcy a Good Idea
A joint bankruptcy is a bankruptcy process where married couples file for bankruptcy under one petition. Under a joint bankruptcy, the debts and estates of both spouses are combined and belong to the same bankruptcy case. In most cases, married couples are better off filing for joint bankruptcy. However, there are some exceptions where filing individually makes much more sense.
When deciding whether to file for joint bankruptcy or not, there are some factors you need to consider. Are you filing for Chapter 7 or Chapter 13 bankruptcy (you can learn the difference at this link: https://www.thebklawyers.com/chapter-7-vs-chapter-13-bankruptcy/)
Essentially, you should choose the option that allows you to keep as many assets as possible while discharging the most credit. Here are some factors you need to consider before filing for joint bankruptcy.
Which Debts Are You Trying to Get Rid Of?
This is the first question you need to ask before filing for joint bankruptcy. A joint bankruptcy can help both you and your spouse clear out all of your dischargeable debts. But if only one of you files for bankruptcy, the other one still keeps all of their debts and any joint debts. Therefore, if both spouses are in debt filing for joint bankruptcy is the logical choice.
However, if you have a couple of joint debts or none at all, while your spouse has a lot of debts, filing together may not be your best option. In that case, it’s better for your spouse to file alone to clear out all of their debts.
How Many Assets Do You Own?
In joint bankruptcy, all the assets you or your spouse own are included in the filing. This includes all individual and joint property. Deciding whether to file for a joint bankruptcy also depends on the number of exempt assets. In some countries couples can file together to double the exempt property, meaning you can keep more of your assets.
If you file individually, any assets your spouse owns are not included in the filing. So if your spouse has a lot of nonexempt assets, perhaps it’s a better choice to file individually to minimize your losses.
The Costs of Joint Bankruptcy
When filing for bankruptcy you have to pay a filing fee, as well as pay for an attorney. Filing for joint bankruptcy means saving a lot of cash compared to filing individually two times. This is because the court filing fee is the same for both joint and individual filings. Additionally, bankruptcy attorneys usually charge less for a joint bankruptcy compared to two separate bankruptcy cases.
Is it More Convenient?
When filing for bankruptcy you have to provide your financial information to the trustee and the court and visit at least one hearing with the trustee. When filing for joint bankruptcy, you can attend the hearing together and provide a single set of bankruptcy documents. Because of this, filing a joint bankruptcy is usually more convenient than filing two separate times.
How Does It Affect Your Credit Score?
The effects of filing for a joint bankruptcy will be reflected on both your and your spouses’ credit report. While bankruptcy may have a negative effect on your credit score at first, in most cases the score increases not too long after the filing. But if your credit score is good, and your spouse is filing for bankruptcy to clear out their own debts, perhaps they should file for bankruptcy individually.
If you’re looking for a reputable bankruptcy attorney in San Diego, contact The Bankruptcy Lawyers Chang & Diamond, APC at
9089 Clairemont Mesa Blvd, Suite 110, San Diego CA 92123