Hello, I'm Karla Mitchell. Going through a legal case can be very expensive and challenging. I won't go into details, but I recently underwent my own legal battle that lasted several years. It is finally over and I successfully received a settlement, but I had to spend so much time studying law in order to play my role in my own court case. While I found a great attorney at one point, I felt completely lost initially and I don't want anyone else to experience the same thing. So I decided to create this blog for those who would like to know more about law.
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If you have a lot of debt and are having trouble repaying it, you might consider the idea of filing for bankruptcy. If your spouse has great credit and does not owe any debts, he or she may not want to file with you though. You can file for bankruptcy individually, even if you are married, but there are several things you should understand about this before you file. Here are three important things to know before you meet with a bankruptcy attorney.
You Might Be Forced Into Chapter 13
The two main types of bankruptcies are Chapter 7 and Chapter 13. Chapter 7 is often a better option, simply because it allows you to have more debt discharged. The downside to Chapter 7 is that you can only qualify if you earn less than the median income in your state. If your income exceeds this amount, you will be forced to use Chapter 13 if you want to file for bankruptcy.
Chapter 13 can be beneficial for many situations, but it does involve a repayment plan. This means you will be forced to repay at least some of the debt you owe.
The one important factor to realize is that when you file for bankruptcy individually, you will have to report all the income in your household, including your spouse's income. This is true if you file jointly or alone, and this is the reason you may not qualify for Chapter 7.
The bankruptcy court views a person's financial situation in terms of the entire household. While you may have very low income, your spouse's income might push you over the threshold, leaving you with only one option–to file Chapter 13.
Your Spouse May Be Responsible For Your Debts
The second thing to understand is that your spouse may end up being responsible for your debts if you file for bankruptcy. If you file for Chapter 7 and receive a discharge, your spouse may still have to pay any of the debts that were jointly owned. For example, if you owe money on a credit card that is in both names, the company will forgive the debt for you, but they will come after your spouse for the balance.
You should also realize that when you file for either type of bankruptcy, you will have to provide a full disclosure of your entire financial position, including everyone in the household. While income is one of the things you must report, you will also have to list every asset owned by everyone in your house.
If your spouse owns valuable assets that are in his or her name alone, you must still list them. The bankruptcy court will not typically be able to seize any assets that are not in your name if you file individually; however, you are not legally allowed to transfer assets to your spouse before you file.
Illegal Activity Will Result In A Dismissal
If you want to protect your spouse's credit by filing bankruptcy alone, there are things you might be tempted to do before you file to avoid losing your assets. For example, you might consider transferring all your assets into your spouse's name right before you file. This is an example of an illegal activity that is strictly prohibited before filing for bankruptcy.
If you do this and are caught, the bankruptcy court could dismiss your case, which means you will not be able to file for bankruptcy at this time.
Meeting with a bankruptcy attorney or someone like John G Rhyne Attorney At Law is the best way to find out whether you should file jointly or individually. To learn more, contact an attorney today.
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