Like filing taxes, it is your choice whether you file an individual or a joint bankruptcy. There can be advantages and disadvantages. One of the advantages of only one spouse filing is that the bankruptcy will only be reported on that person’s credit report. So the non-filer’s credit won’t be affected. This can be a useful option if one person has all or most of the debt, and the other spouse will need to use their credit rating in the near future to qualify for a car loan or mortgage. The best time for one spouse to file without the other is when all of the debts are in the name of only one spouse. This usually applies to newly married couples, or where one spouse has been running a business that failed.
But if you are both responsible for a significant amount of debt, it is advisable to file jointly. An individual bankruptcy filing by one spouse may not stop collection attempts – letters, lawsuits, garnishments – against the non-filing spouse. If only one of you files, the non-filing spouse will still be liable for his or her separate debts, plus a share of joint debts.
After weighing up the factors, if you to decide to file individually, the petition and schedules do require you to disclose the non-filing spouse’s income. This is because if you share the same household, his or her income is included in the bankruptcy calculations. However, you may also deduct your spouse’s personal expenses, i.e. car payment, monthly credit card payment, etc. This is called the marital adjustment deduction.
A joint petition can save you money and time over filing two individual cases. Our firm charges the same fee for a joint or individual case. A joint bankruptcy is more convenient and efficient, because it allows married couples to complete only one petition, attend mandatory hearings together, and discharge all of their debts through a single bankruptcy.
It’s time for a fresh start. Filing for bankruptcy could be a way to shake off some of the weight holding you down. Call today (808) 528-4274 for a free consultation.