Filing Chapter 7 Bankruptcy – Married or Separated?

Millions of Americans consider filing for bankruptcy each year. With unemployment at record levels and people under mountains of debt, nearly 1.5 million are expected to file for bankruptcy in 2011. There are many reasons why families and individuals need to apply for relief to get out of debt. In recent years many have lost their jobs and due to the economy it is almost impossible to find a job to replace it. Facing this situation, it is impossible for them to keep up with their bills. Bankruptcy laws were created to help good people who find themselves caught in an unexpected circumstance and allow them to have a second chance by eliminating their debt. Today, many Americans suffer for various reasons from job loss to spending lock-in to ending up upside down due to too much available credit. Whatever the reason, bankruptcy will help these families get a fresh start.

When filing bankruptcy, married couples often ask their bankruptcy attorney if it is possible to file single to try to save each other’s credit. Couples have the perception that their family will need credit to survive, and unless one of them stays out of bankruptcy, it will be impossible to get credit. The fresh start benefit of bankruptcy would be degraded if one’s spouse did not participate in the bankruptcy. The spouse who stays out of bankruptcy will end up having to make payments on their share of the old community debts. As shown in the past, this can also cause a breakdown in the marriage because they no longer share financial responsibility. Unless your bankruptcy attorney thinks it is in your best interest to file a separate return, it is always better to file a joint return eliminating all debt. After filing bankruptcy, as long as you continue to receive substantial income, credit should pick up quickly.

Current monthly income is what is used to qualify for Chapter 7 bankruptcy. If a married couple files separately, the CMI is still based on household income. In other words, if the couple is working, the current monthly income to qualify for Chapter 7 will still be based on their combined wages. This is another reason why it doesn’t matter that filing separately benefits a married couple. This is important information to discuss with a bankruptcy attorney. There are different time periods that could benefit the filing couple based on when their wage mix is ​​lowest.

Nobody really wants to declare bankruptcy. The idea that filing for bankruptcy is a last resort is no longer sound advice. Some people wait too long to consult a bankruptcy attorney about filing. In many situations, they could save their home or retirement account if they were more proactive. There are people who have lost their job and spend their entire pension paying off their credit card debt in the hope of getting another job. These people could have saved your retirement account, since it is protected, if they had been more realistic about their financial situation. Don’t wait until all your resources are exhausted, consult with a local bankruptcy attorney and see if filing for bankruptcy works for you.