Chapter 7 bankruptcy provides a financial solution for individuals struggling to pay off unsecured debt like credit card debt, utility bills, and medical bills. For married couples, there’s always the question of whether one can file for Chapter 7 bankruptcy alone and how filing may affect a spouse’s credit. Individuals may consider filing alone if their debts were acquired before marriage or without the other spouse’s participation. Working with a Florida bankruptcy lawyer can help you understand the implications of filing alone and how it compares to filing jointly.
Can I File for Chapter 7 Bankruptcy Alone If I’m Married?
How Bankruptcy Saved My Family And How It May Save Yours
First off, individuals can file for Chapter 7 bankruptcy singly in marriage. It follows that filing alone will not affect your spouse’s credit, but that may not always be the case. While there’s no one-size-fits-all approach to the question of whether to file jointly or separately, filing for Chapter 7 bankruptcy jointly is usually preferable. However, a bankruptcy lawyer can help evaluate your situation and advise on the best course of action – one that’s favorable for both parties.
Factors to Consider When Filing For Chapter 7 Bankruptcy Alone
For some debtors, filing alone may not even be an option. Several factors determine whether you are eligible to file alone in marriage and how successful an option it can be. Some questions to ask before filing for Chapter 7 bankruptcy alone include:
- Do you co-own property with your spouse?
- What are the Florida laws regarding shared property?
- Are your debts individual or shared with your spouse?
Filing for Chapter 7 bankruptcy jointly proves to be better for married couples than one party filing alone. In terms of costs, filing a joint bankruptcy petition means that you only pay the filing fees once instead of filing separately and paying the fees twice. In case married couples have shared debts, filing jointly offers better cover than having one spouse filing alone.
For the case of married couples who have their names, say on a car loan, the creditor can still pursue one spouse for payment if the other spouse files for bankruptcy. It is important to note that filing alone will still involve the non-filing spouse. The court will consider their incomes and debts upon filing.
Shared Debt In Chapter 7 Bankruptcy
If a married couple has a shared credit card or account, only your obligation to pay off the debts is erased upon filing for Chapter 7 bankruptcy. Creditors will still come after your spouse for debt repayment. In some cases, your bankruptcy will also show up on your spouse’s credit report, but it shouldn’t affect their credit score as long as they bring the accounts current. Premarital and non-marital debt (debt in the name of one spouse only) would not be split since only one party benefited from it.
Chapter 7 Bankruptcy And Divorce In Florida
Financial strain is often cited by most as a reason for divorce, and individuals may file for Chapter 7 bankruptcy during, before, or after divorce. The big question is which of these events should come first, and the interplay of the two events. Before putting these events into motion, it is important to understand that they can hardly take place simultaneously – one will take precedence over the other. If both cases are pending simultaneously, bankruptcy is usually pushed aside until the divorce court allocates marital assets and debts to each party.
Whether to file for bankruptcy pre or post-divorce will depend on your financial situation and the Florida laws that apply. Filing for Chapter 7 bankruptcy after divorce often makes proceedings simpler – each spouse is allocated their assets, debts, and other obligations like child support and alimony.
Joint Chapter 7 Before Filing For Divorce
Filing jointly for bankruptcy before a divorce will potentially wipe out some or all marital debts that would have otherwise been split between spouses. It also cuts on the cost of filing as you only file one case. Getting rid of your debts before filing for divorce through joint Chapter 7 bankruptcy will also make the division of assets in the divorce easier since you won’t have to account for most of the debts. Filing jointly also means that you can protect more property by “doubling” some exemptions. However, married couples in Florida can’t double the homestead exemption.
Filing for bankruptcy before a divorce will depend on whether a spouse qualifies for Chapter 7 bankruptcy. Specifically, an individual must pass the Florida Means test to file for Chapter 7 bankruptcy singly. In cases where one spouse earns most of the income, filing for bankruptcy after completing a divorce can help both spouses to qualify for individual Chapter 7 bankruptcies.
Filing for Chapter 7 bankruptcy while a divorce case is pending will stop the ongoing divorce proceedings about property division. An automatic stay on property division comes into effect in bankruptcy, and almost all your property becomes part of your bankruptcy estate. What’s more, the automatic stay stops all actions to obtain the property of the bankruptcy estate, including proceedings to divide the estate property during divorce.
Exceptions To The Automatic Stay In Divorce
While the automatic stay stops proceedings related to property division in divorce, it doesn’t affect the actions to establish child support or custody. If your divorce proceedings are at the point of determining who gets child custody or whether either spouse will take up child support obligations, filing for Chapter 7 bankruptcy won’t stop these proceedings.
If a divorce is looming following a spell of financial struggle, the decision of what event to file first is a crucial one and is determined by several factors, as highlighted above. It is important to consider the property that you can keep in bankruptcy and how filing for Chapter 7 bankruptcy may affect your spouse’s credit. Seeking the counsel of a bankruptcy and family lawyer will also help you make the right decision for the situation.