Understanding The Impact of Bankruptcy on a Spouse
Even if you are married, you can still file for individual bankruptcy. However, if you and your spouse have joint debts, there are some things you need to consider before filing.
How Do I Decide if I Should File Alone or With My Spouse?
The answer to this question depends on your financial situation and the debts that you and your spouse share. If one spouse only has debt or one spouse had non-dischargeable debts, it may be best to file individually.
However, if you and your spouse have joint debts and file individually, the debt could still show up on your spouse's credit report. Creditors may also seek out your spouse for repayment of the debts if you didn't file jointly. The best way to approach bankruptcy is to speak to an experienced bankruptcy attorney to learn the options that will best suit your situation.
Will My Spouse's Income Need to Be Included If I File for Bankruptcy Separately?
If you and your spouse share the same household, then you would be required to include your spouse's income; otherwise, if you live in separate homes, then you would not. For spouses who share a household, both Chapter 7 and Chapter 13 require both spouse’s income.
When filing for chapter 7, your spouse's income will be included in the means test. The means test calculates your disposable income and how much you can pay towards your creditors after factoring in your monthly expenses. If you are filing for Chapter 13, your spouse's income will be included in Form 22C, which determines your disposable income for the calculation of your payment plan.
Including your spouse's income could have an impact on whether or not you will be eligible for Chapter 7 bankruptcy. However, marital adjustment deductions can be considered if your spouse's expenses are paid separately from their personal income. Some examples ofmarital deduction expenses are student loans or credit cards in their name, paycheck deductions, and retirement plan payments.
Thinking About Bankruptcy? Licata Bankruptcy Firm Can Help.
Filing for bankruptcy is a hard decision to make, and when your spouse is involved, it can make it that much harder to decide. However, when debt is becoming unmanageable, you may feel hopeless and don't know where to turn for help. Know that you are not alone, and our team of experienced bankruptcy lawyers is here to answer your questions and ease your concerns.
You and your spouse don't have to live with crushing debt. At Licata Bankruptcy Firm, our mission is to help individuals, families, and businesses get the financial relief they need through bankruptcy. You deserve one-on-one personalized attention, and we are here to help you get through a difficult time and walk you through every step of the bankruptcy process.
To learn more about your options, contact our Springfield bankruptcy attorneys at (417) 213-5006 today.