Navigating Bankruptcy as a Married Couple: Understanding the Process

 

Bankruptcy is a complex legal procedure designed to provide relief for individuals or couples overwhelmed by debt. For married couples, navigating bankruptcy requires a comprehensive understanding of the process and its implications on marital assets. In this article, we will explore the various aspects of bankruptcy for married couples, including filing options, types of bankruptcy, and considerations for protecting shared assets.

Understanding Bankruptcy Options:

When facing financial distress, married couples typically have two primary options for filing bankruptcy: jointly or individually. Filing jointly combines both spouses' assets, debts, and income into a single bankruptcy case. This approach offers a comprehensive solution for couples with shared financial burdens. Conversely, filing individually may be advantageous if one spouse has significantly more debt or better credit. However, it's essential to consider that individual bankruptcy does not eliminate joint debts, leaving the non-filing spouse vulnerable to creditor actions.

Types of Bankruptcy:

The most common types of bankruptcy for individuals and married couples are Chapter 7 and Chapter 13. Chapter 7 bankruptcy, also known as liquidation bankruptcy, involves the sale of non-exempt assets to repay creditors, with any remaining eligible debts discharged. In a joint filing, both spouses' assets and liabilities are considered in the bankruptcy estate. Conversely, Chapter 13 bankruptcy entails creating a repayment plan to pay off debts over a specified period, typically three to five years. Both spouses' incomes are used to determine the repayment plan in a joint filing, making Chapter 13 suitable for couples with a regular income but struggling with debt.

Impact on Marital Assets:

Bankruptcy can significantly affect marital assets, including property, savings, and retirement accounts. The treatment of marital property in bankruptcy depends on whether it is considered exempt or non-exempt. Exempt property, such as primary residences and retirement accounts, is protected from liquidation, while non-exempt property may be subject to sale to repay creditors. Additionally, joint debts remain the responsibility of both spouses, even in bankruptcy, potentially affecting the non-filing spouse's financial standing.

Considerations for Married Couples:

Navigating bankruptcy as a married couple requires open communication, professional guidance, and long-term financial planning. Honest discussions about financial difficulties are essential for making informed decisions about bankruptcy and its implications. Consulting with a bankruptcy attorney or financial advisor specializing in bankruptcy can provide valuable insights and assistance throughout the process. Furthermore, developing a long-term financial plan, including budgeting, saving, and rebuilding credit, is crucial for achieving financial stability post-bankruptcy.

Bankruptcy can be a daunting prospect for married couples, but with a thorough understanding of the process and careful planning, it can provide much-needed relief from overwhelming debt. By exploring bankruptcy filing options, understanding the types of bankruptcy available, and protecting marital assets, couples can navigate bankruptcy with greater confidence and work towards a brighter financial future together.

 

Lewis and Jurnovoy is a local law office serving the Florida Panhandle. We specialize in bankruptcy law, including Chapter 7 and Chapter 13 bankruptcy. We will work to achieve the best financial remedy for your outstanding debts.

Lewis & Jurnovoy PCB
2714 West 15th St
Panama City, FL 32401
(850) 913-9110
https://www.LewisandJurnovoy.com