June 25, 2024

Existinglaw

Law for politics

When Should You File Joint Bankruptcy – Important Facts You Should Know

When you are staggering under a heavy debt burden, you may be worried about repayment and it is natural to assume that your spouse is also responsible for shouldering this burden. Many people are surprised when they find out that this may or may not be the case. Actually, it all depends on the laws of the state that you are residing in.

Some state laws hold the spouse automatically responsible for any debt incurred by you whereas in other states, your spouse is not responsible for your debts unless he or she is a co-signatory to the debt. If your spouse is automatically responsible according to the Law, then it may be better if you file joint bankruptcy.

Oftentimes, a person may file for bankruptcy thinking that the assets in his or her spouse’s name cannot be attached only to find out too late that this is not true. When you are planning to file for bankruptcy, it is better to consult a good bankruptcy lawyer who can help you make the decision whether you should go in for filing bankruptcy singly or opt to file joint bankruptcy. In states other than Washington, Wisconsin, Texas, Nevada, Louisiana, Arizona, California, New Mexico and Idaho, you do not automatically become responsible for your spouse’s debts except when you have cosigned.

In the nine states mentioned above where community property law is applicable, any income or asset that was obtained during the course of the marriage can be attached by your creditors when you file for bankruptcy. Some exceptions to community property are inheritances, and gifts and you get to keep them if your spouse files for bankruptcy. But you should understand that as a resident of one of these states, both if you are responsible for debts incurred by either. In this case, you need to file joint bankruptcy if your spouse has debts that cannot be managed.

The final information that you require once you have made a decision to file joint bankruptcy is the type of bankruptcy that you must opt for. One option that releases all your debts through liquidation of nonexempt assets is Chapter 7 bankruptcy. On the other hand, if you want to keep some of your assets, filing Chapter 13 bankruptcy can help you repay your debts over 3-5 years according to a repayment plan. An added benefit of Chapter 13 bankruptcy is that if you are behind on your mortgage payments, you can catch up on them.