filing bankruptcy while married

Filing Bankruptcy While Married

If you’re considering filing bankruptcy while married, you’re not alone. Thousands of married couples are in your situation, and the bankruptcy filing statistics are easily found online, showing you that you’re not alone. The good news is one spouse can file bankruptcy without affecting the credit of the non-filing spouse. This article contains an examination of a few scenarios where you may want to file bankruptcy while married—even if your spouse isn’t filing with you.

One Spouse’s Debt Can Cause Anxiety In A Relationship

If one spouse brings debt to a marriage, despite best intentions, the other spouse may feel resentful of the pre-marriage debt. At the very least, as a couple, you deserve a ‘fresh start’ together and that includes being free of debt you did not decide to incur together.

Computing The Means Test In Bankruptcy

If you’re filing bankruptcy while married, you will need to disclose the income of both spouses. This is done for the purpose of passing The Means Test in bankruptcy. The reason is that the federal bankruptcy code uses household income as the starting point for determining whether you qualify for bankruptcy. If you live with your spouse, you’ll need to count their income. The good news is most couples still qualify even when counting the income of their spouse.

Lastly, there is an option to take a Marital Deduction on The Means Test. This option allows you to more accurately show the court the amount of the household income which is being used by the non-filing spouse. Ultimately, this deduction reduces your income for The Means Test. The deduction is easy to calculate and your bankruptcy attorney will walk you through it.

Protecting Your Spouse’s Credit In Bankruptcy

Your spouse’s credit will not suffer due to your bankruptcy. Your bankruptcy will not show on their credit report, nor will it come up when applying for credit of any kind. When one spouse files for bankruptcy, the bankruptcy only affects the debts of the spouse who is filing. In other words, the marriage does not change the effect of the bankruptcy from a credit standpoint.

Protecting Your Spouse’s Assets In Bankruptcy

None of your spouse’s own assets will be affected by your bankruptcy. If you have joint assets such as a house or a jointly owned vehicle, those assets can typically be protected in bankruptcy. The good news is only half of their value is counted for your bankruptcy filing when married. Lastly, if your spouse has a 401k or savings account in their name only, those assets are not part of the bankruptcy filing.

Joint Debt In Bankruptcy

If you have joint debt with your spouse, you may want to consider filing together. However, it is still perfectly fine to file without your spouse. One thing to consider is the obligation on joint debt. Most marital debt obligations are “joint and several” liability. This means that both spouses are obligated for the full balance of the debt. If one spouse file bankruptcy, that spouse will no longer be responsible for the debt; however, the non-filing spouse will still be responsible for the entire balance of the joint debt. If the non-filing spouse decides to file at a later date, that would of course eliminate their obligation on the debt.

Your non-filing spouse may choose to attempt Debt Settlement instead of filing bankruptcy. This is a common way to successfully address a small amount of joint debt or debt that belongs only to the non-filing spouse.

Vehicles In Bankruptcy When My Spouse Isn’t Filing

The only vehicles which must be disclosed as assets are those vehicles which are titled in the name of the individual who is filing. If you transferred title to a vehicle from one spouse to another within four years of filing bankruptcy, that transfer should be disclosed in your bankruptcy filing. The transfer most likely will not negatively affect your bankruptcy filing, but disclosing it is in alignment with the court’s requirements for full disclosure of all transfers to family members and “insiders” (family and friends) within a four year period preceding your bankruptcy filing.

Further Reading

You can read hundreds of articles like this one on our Bankruptcy Blog.

Speak With A Bankruptcy Lawyer Today

If you’d like to set up a free consultation about filing bankruptcy while married, you can call us at 704.749.7747 or click to request a FREE CASE EVALUATION and we will reach out to you. We know you have choices, and we hope you choose to Recover With Us.

how does bankruptcy affect you

How Does Bankruptcy Affect You?

While this question is general, we understand the concern. Most clients want to understand what it will be like during their bankruptcy, right after their bankruptcy, and a few years down the road from bankruptcy. This article is meant to address the question “How does bankruptcy affect you?” and we hope it helps. You can also read more specifically about how quickly you can file bankruptcy, or about Chapter 7 or Chapter 13.

How Are Things Right Now?

It’s important to put things into perspective when wondering how bankruptcy will affect you. It’s worthwhile to take stock of some of the experiences you’re having currently. They may include:

Creditors Pursuing You

No Savings For Emergencies

Inability To Save For The Future

Feeling Like You’re Failing Financially

Stress And Anxiety

All of these are very real concerns. Filing bankruptcy helps every single one of these concerns, from the moment you decide to file.

What Happens When I File Bankruptcy?

Creditor Calls Stop—Creditors are no longer allowed to contact you or pursue debt, in accordance with The Automatic Stay in bankruptcy. You get this protection from the day your bankruptcy lawyer files your case. We have addressed Credit Cards In Bankruptcy in a prior article.

Savings Increases—You immediately stop paying creditors with your hard-earned income, and can use those funds to make sure rent or mortgage is paid. You can make your car payments on time. Or, if there is extra money leftover, you can put it aside for savings.

You Feel Financially Healthy—With all of your unsecured debt gone, the immediate effect of bankruptcy is to free you from the burden of having overwhelming debt that you can’t keep up with over time.

Stress Melts Away—It’s amazing how stressful financial situations are. Without aggressive creditors calling you and reminding you every day that you owe them money, you’re free to focus on what’s important to you. The household budget is suddenly ‘balanced’ and you can afford necessities.

Credit Score—Immediately after filing bankruptcy, your credit score will drop due to the filing. Unless your credit was perfect before filing, you’ll find this dip in your credit score is a small price to pay for all of the benefits you receive upon filing bankruptcy. You can read more about your Credit Score In Bankruptcy as well.

How Does Bankruptcy Affect You One Year After Bankruptcy?

Credit Score—About a year after filing bankruptcy, your credit score will recover to where it was just before filing. From there, you can continue to re-build your credit quickly.

You’ll Receive Credit Card Offers—While most clients swear off credit cards upon filing bankruptcy, receiving offers for credit cards a year after filing bankruptcy is a sign of healthy credit. It means if you do decide to buy a car or need credit, it’s available for you. The reason for this is when you file bankruptcy you eliminate a lot of debt. From a creditor’s standpoint you become a great candidate for extending credit. Creditors also know you can’t file bankruptcy again for roughly eight years, so they count on you paying your monthly credit card bill if they offer you a credit card.

You’ll Have Opportunities To Save—With high monthly payments to creditors out of the way, you will find that each month you can set aside some money. This may be for savings, a future vacation, or some other necessity life brings your way. The peace of mind that comes with having some savings is priceless.

How Does Bankruptcy Affect You A Few Years After Bankruptcy?

Your Credit Score Fully Recovers—While bankruptcy may stay on your credit report for about 8 years, it doesn’t mean your credit score can’t recover much sooner than that. By making on time payments on mortgage, car, or other debt, you’ll accrue a good credit rating over time.

You Can Buy A House—Two years after filing bankruptcy, you’ll become eligible for some federal loan programs for purchasing a home. Four years after filing, you’ll become eligible for most private funding available on the marketplace from lenders like Quicken, Wells Fargo, or other mainstream mortgage providers.

You’ll Know You Made The Right Choice—With all of the financial options in front of you, and with all of your debt behind you, your decision to file bankruptcy will reveal itself as one of the best decisions you’ve made for yourself and your family.

Further Reading

How Does Bankruptcy Affect My Spouse?

Click to read over 100 Bankruptcy Blog Articles.

Speak With A Bankruptcy Lawyer Today

If you would like to get some questions answered, or take the next steps toward a painless bankruptcy filing, call us at 704.749.7747. You can also click for a FREE CASE EVALUATION and we’ll reach out to you. We know you have choices. We hope you choose to Recover With Us.

benefits of chapter 7

Downside Of Filing Bankruptcy

Clients routinely ask “What is the downside of filing bankruptcy?” While there certainly is a downside to filing bankruptcy, a thorough review of most clients’ financial situation reveals that a bankruptcy is the right financial move for them. This article will the downside of filing bankruptcy, but also help to put it in context. As a Charlotte bankruptcy attorney, my goal is to help you decide what’s best for you and your family.

Effect of Bankruptcy On Your Credit Score

Bankruptcy will no doubt affect your credit score. However, this is usually only a concern for those with perfect a perfect credit score coming into a bankruptcy. That situation is rare. More often, a client’s credit score is already low due to late payments, missed payments, repossessions, foreclosures, or other financial issues.

The good news is that for most individuals, your credit score one year after filing bankruptcy will be as good as it was on the day you filed. In other words, one year after filing, your credit score has already recovered and you no longer have the debt issues you had prior to filing. From there, it’s easy to re-build your credit if you’re intentional about it. Our firm always offers tips on rebuilding credit after bankruptcy, and they do make a difference.

Effect of Bankruptcy On Credit Cards

When you file bankruptcy, you can’t keep “a few credit cards”. All of your credit cards will be cancelled upon filing. The good news is you’re no longer living on credit cards. A common question arises regarding having a credit card for emergency purposes. Most clients report to us that credit card companies offer them credit soon after they receive their discharge in bankruptcy. The reason is the bankruptcy filing improved your Debt To Income ratio and made you a great candidate for credit cards. Additionally, creditors like extending credit to individuals who recently filed bankruptcy because they know you’re more likely to repay the debt. After all, you can’t file bankruptcy again for a long time.

Effect of Bankruptcy On Getting A Mortgage

It’s true, you won’t be able to obtain a mortgage for two to four years after bankruptcy. However, you have to ask yourself if you could obtain a mortgage with your current credit score and debt situation. Most clients can’t. So while the intention to purchase a home is a good one, filing the bankruptcy is actually the first step in the right direction. During the two year waiting period, you can save for a down payment or pay down student loans, or contribute to your 401k. You won’t fall behind by filing bankruptcy.

Not All Debt

Bankruptcy does not discharge all debt. Some debt takes priority and survives a Chapter 7 or needs to be paid in full in a Chapter 13. For instance, Child Support, Recent Taxes (less than 3 years old), Mortgage Arrears, and Student Loans. Clients report that by filing bankruptcy and eliminating credit card debt and medical debt, as well as other types of debt, it enables them to focus on re-paying the types of debt which do not go away with a bankruptcy filing.

Speak With An Attorney Today

We know deciding to file bankruptcy is an important choice. We tell some clients it’s not a good choice for them. We’re happy to hear your story and help you decide. We know you have choices. We hope you choose to Recover With Us. If you’d like to speak with an attorney today, call 704.749.7747 or click for a FREE BANKRUPTCY CONSULTATION and we’ll give you a call or reply to your email.

Is Bankruptcy Right For Me

If you’re asking yourself “Is bankruptcy right for me?” most likely, the answer is yes. We work every day with hard working individuals who simply can’t keep up with growing medical debt, credit card debt, or mortgage problems. Bankruptcy offers a powerful solution which is life-changing.

When a potential client is wondering “Is bankruptcy right for me?” we encourage them to look more specifically at a few areas of their finance life, in hopes of helping them find an answer. Typically, our bankruptcy clients have spent years trying to pay off credit card debt. Unfortunately, the interest rates, late fees and penalties make it all but impossible. The banks will survive if you file bankruptcy. Our biggest concern is the health of you and your family.

How Expensive Is Bankruptcy

We are very much aware that when you’re having trouble making ends meet, the idea of paying a law firm for a bankruptcy can be overwhelming. Fortunately, most clients find the fee for bankruptcy is reasonable. Additionally, once you know you’re going to file bankruptcy, you can stop making payments on debt which will be discharged in bankruptcy. This includes medical bills, credit card debt, and often tax debt. If you’d like to request a free quote for bankruptcy, click here: FREE BANKRUPTCY QUOTE.

How Immediate Is The Relief

The day you file your bankruptcy papers with the federal court, your creditors will be sent notice of the filing. This means they can no longer contact you in an attempt to collect a debt. It also means any legal actions including foreclosure and writs of execution, are automatically frozen by the Automatic Stay in bankruptcy. Your phone stops ringing, threatening letters stop arriving by mail, and peace is immediately restored to your life.

How Quickly Will I Recover

This is a question which certainly is on everyone’s mind. Bankruptcy clients are often surprised at how quickly they begin to recover from bankruptcy. While the bankruptcy will show on your credit for up to 10 years, you will begin to receive offers for vehicle financing, credit cards, and other extensions of credit, within one year of filing. Most clients report that their credit score one year after filing bankruptcy is better than it was on the day they filed bankruptcy. If you’re wondering “Is bankruptcy right for me?” these are great answers when it comes to credit scores!

Can I Buy A House If I File Bankruptcy

We love that clients think ahead about the dream of home ownership. For most clients considering bankruptcy, there’s no way to buy a house due to the amount of debt they have, and the fact their credit score has usually been lowered by aggressive banks reporting late and non-payments. There’s good news. Two years after you complete your bankruptcy, you’ll become eligible for some federal home lending programs. Four years after you complete your bankruptcy, you’ll become eligible for the same loan products everyone in the private market is eligible for. In the meantime, you’ll be able to save for a down payment because you won’t be sending money to credit card companies every month.

Speak With A Charlotte Bankruptcy Attorney

If you’d like more information about filing bankruptcy, speak with a Charlotte bankruptcy attorney today. You can call us at 704.749.7747 or click here for a FREE CONSULTATION. We know you have choices. We hope you choose to Recover With Us.