Should married couples file chapter 7 together or separately?

On Behalf of | Jul 20, 2023 | Chapter 7 Bankruptcy |

Chapter 7 bankruptcy is a common form of debt relief. It involves liquidating nonexempt assets to pay off debts and granting a discharge for eligible debts. Usually, it is sought by individuals seeking a fresh financial start. But for married couples facing financial hardship, one decision can significantly affect the outcome of their case. Should they file as a couple or as separate individuals?

Joint filing

A joint petition may be advantageous if both spouses share significant joint debts. It streamlines the process by consolidating debts and reducing paperwork. Filing together can also result in lower attorney fees and court costs. Couples may assess their household’s combined income. If it exceeds the state’s median income, filing jointly may be possible. Individual petitions might not qualify in this situation.

Filing separately

On the other hand, individual petitions can be a practical option when only one spouse faces substantial debts. The nonfiling spouse’s assets and credit score remain unaffected by filing individually. Given the liquidation process, this approach can safeguard assets that might be at risk in a joint filing. Couples should consider their individual income and expenses carefully before deciding. In some cases, filing jointly may lead to the inclusion of additional household income. This may disqualify the couple from Chapter 7. They may need to file for Chapter 13 bankruptcy instead.

Whether a husband and wife should file a joint petition or individual petitions under Chapter 7 bankruptcy depends on the specifics of their financial situation. Both options have distinct advantages and disadvantages but note that bankruptcy laws vary by state. Seeking professional advice is critical to making an informed decision in pursuing financial stability.


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