Couples don’t share finances until later in their lives, it is possible for one person to have debt while the other doesn’t. Some people might consider personal bankruptcy, even though they are not accompanied by their partner. Remember that personal bankruptcy can still have a negative impact on your partner’s finances, legal rights, and emotional well-being.
Merge of Debts Between Couples
Each partner will be responsible for any debts they have incurred before marriage, such as student loans and credit card debt. However, debts incurred after marriage are shared.
After marriage, you might be responsible for the following:
- Purchases of a car or a home together are possible.
- Cosigned loans
- Debt charges to a joint account or shared account
You can file for bankruptcy separately or jointly if you are married. Both have their pros and cons. It all depends on the type of debt and financial situation of the couple.
Chapter 7 vs. Chapter 13 for Couples
Most couples file Chapter 7 bankruptcy. This involves liquidating assets to pay off their debts. To qualify for Chapter 7, bankruptcy, you must pass the means testing. This test is based on your household median income. If your disposable income after paying monthly bills falls below a threshold, you may be eligible.
Chapter 13 bankruptcy may be another option for you or your spouse. This allows you to avoid liquidating assets and discharge some or all of your unsecured debts such as tax debt. Chapter 13 bankruptcy can result in a three to five-year repayment plan and a significant hit to your credit score.
If you have significant joint debt, it is better to file both chapters together. It is usually better to file separately if one spouse holds most of the debt.
Couples Exemptions from Bankruptcy
The federal government and Ohio have a list of exemptions that can protect your assets such as real estate and cars. This applies to Chapter 7 bankruptcy and Chapter 13.
These exemptions can be doubled if you file jointly. This allows you to keep more of your property.
This post was written by Trey Wright, one of the best bankruptcy lawyers in Tallahassee! Trey is one of the founding partners of https://brunerwright.com/, specializing in bankruptcy law, estate planning, and business litigation.
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