Before filing for any type of bankruptcy, it’s important to consider all your options and make sure you’re choosing the route that offers the best way to achieve your debt relief goals. If you are married, you have the option of filing a joint bankruptcy petition with your spouse. There are several benefits to going this route.
Reduce Your Costs
The fee to file for joint bankruptcy isn’t any higher than it is to file singly. That saves you money right there. Plus, a joint bankruptcy can be completed with the help of a single attorney and a single bankruptcy process, which also saves you money versus completing two separate bankruptcy proceedings.
Eliminate Both Spouses’ Debts
Married couples can hold debts jointly or individually. If only one spouse files for bankruptcy, that will only cover their individual debts, plus their share of any joint debts, leaving the other spouse holding the bag for the rest of those joint debts. Filing for joint bankruptcy ensures that all dischargeable debts owned by both spouses are included in the bankruptcy. This helps give couples a totally fresh start after their bankruptcy.
Less Hassle
Filing for bankruptcy requires collecting extensive financial documentation and completing a consumer credit counseling course, plus attending at least one hearing with a bankruptcy trustee. Filing a joint bankruptcy is more efficient for couples because they only have to deal with these hassles once.
Double Select Exemptions
In many states, couples can double the amount of assets and property they can exempt from the bankruptcy by filing in jointly. In California, there are only a few types of assets whose exemptions can be doubled, such as assets used by both spouses for business.
Why Wouldn’t You File for Joint Bankruptcy?
The main drawback to filing for joint bankruptcy has to do with the California state exemptions. If one spouse owns a great deal of separate property, it may be extremely difficult or even impossible to protect this property from the joint bankruptcy proceeding under the California exemption rules. Another potential problem with filing jointly can come into play if one spouse has a lot of priority debt. For example, if one spouse owes a lot of back taxes or child support, these debts will not be discharged and will increase the monthly payments required in a Chapter 13 bankruptcy. The couple might be better off not including that spouse in the bankruptcy to secure lower payments for the other spouse.
Remember, the best way to know for sure if joint bankruptcy is for you is to consult a qualified attorney.
