Married Couples and Bankruptcy: A Good Solution?
Sara and Jim met in college, fell in love and married. They bought a house and started a family. Jim was an accountant with a reputable firm, Sara a stay-at-home mom. With two kids, one income, a mortgage, two car payments and all the other day-to-day and month-to-month expenses, they found themselves falling slowing but surely into debt. At first, they were not worried, and used credit cards to purchase the things they needed (and maybe didn’t need). Then unexpectedly, Jim’s company downsized, and he was laid off. Suddenly, the credit cards were maxed out. In a short time, Sara and Jim found themselves stressed out and emotionally drained due to their mounting debt. They felt trapped with no way out, and worried constantly they would lose their home.
Like many people, Sara and Jim felt that filing for bankruptcy is synonymous with embarrassment, shame, and something only irresponsible people did. What they should know is that filing for bankruptcy can be a viable and intelligent way to regain control of finances, change past patterns, and start fresh. Westbrook Law Firm, PLLC has been instrumental in helping hundreds of married couples change their financial future for the better by way of bankruptcy.
A married couple, or sanctioned same-sex, registered couple in deep debt will need to decide whether a Chapter 7 or Chapter 13 bankruptcy is the right avenue. With Chapter 7, all of a couple’s unsecured debt can be eliminated. This includes credit cards, medical bills, personal loans and payday loans. Any home mortgage, car loans, unpaid taxes, student loans or child support payments are not dischargeable, and the couple must still pay those obligations. Some of their property may be exempt, meaning it can’t be surrendered to the bankruptcy court for liquidation. An experienced attorney can help determine which property is exempt.
Chapter 13 differs from Chapter 7 in that it’s a restructuring of how a couple pays their debts. They will probably be able to keep their non-exempt property, but an experienced attorney can be instrumental debt, avoiding foreclosure, repossessions, wage garnishment and other penalties in the process.
Should Both Spouses File for Bankruptcy?
Determining whether a couple should file jointly or separately depends on various factors. Every bankruptcy situation is unique. Sometimes it will be most effective and get the best result when just one spouse files. For example, the husband may have actually incurred most of the debt, while the wife has separate property with a high value. If only the husband files, it protects the wife’s separate property and maintains her credit, a condition that will help down the road after the debts have been handled.
The advantages of filing jointly include only having to file and pay for one set of papers and pay lawyer’s fees only once. Also both spouses get to discharge the unsecured debts accumulated by each one. Another advantage is that the exemptions are doubled with a joint filing, and that could result in being able to keep a property that would not be exempt if only one spouse were filing.
Deciding on whether to file for bankruptcy needs to be an informed decision. At our firm, our experience enables us to know how to determine if bankruptcy is a viable solution for you. With our quality legal representation, we work closely with our clients so they can see why we would recommend one financial solution over others, what it will entail, and what they can expect towards debt relief. Contact our firm for a consultation and learn just how we can help you.
- Texas Bankruptcy Law: Texas Bankruptcy Exemptions