How To Handle Bankruptcy If You Are Getting Divorced
Money problems is listed as the second most common reason marriages end in divorce, and this is why many couples who split up end up looking into bankruptcy. If you are going through a divorce right now and have major financial issues, you may want to file for bankruptcy to ease these burdens. If this is something you are considering, you should determine whether you should file individually for bankruptcy or jointly with your spouse. Here are some factors that will affect this decision.
Do both of you want to file?
The first thing to consider is whether your spouse wants to file for bankruptcy or not, as this will determine what your options are. If your spouse does not want to file, you can file alone, even before your divorce is final. If your spouse wants to file with you, you can file jointly before or after the divorce.
Will you qualify for Chapter 7?
After a divorce, it is often best to file for Chapter 7 instead of Chapter 13, especially if you file jointly. If you file jointly through Chapter 13, one spouse will be responsible to make the payments to the trustee each week or month, and this can become cumbersome for a divorced couple.
To qualify for Chapter 7, you will need to earn less money than the average amount of income per person in your state. If you want to file jointly, you must add up both of your incomes to calculate this answer. If your incomes are greater than the average income, you will not be allowed to file for Chapter 7.
This is one of the main reasons a lot of spouses will file individually. If you file individually after your divorce is through, only your income will count. In most cases, this will allow a person to qualify for Chapter 7.
Who holds ownership to the debts?
The other factor you should consider is who owns the debts you have? If your debts are only in your spouse's name, you may not be responsible for them, which means you would not need to file for bankruptcy. If they are in both names, filing for Chapter 7 yourself would get you off the hook for the debts, but your spouse would still be responsible to pay them. If you both file for bankruptcy together, it would eliminate all jointly owned debts.
If you are not sure what you should do or if bankruptcy would help you, contact a bankruptcy law firm in your city, like Cowan & Brady Law Offices Of, to learn more about this.