Bankruptcy is similar to taxes in that you can file as an individual or separately and there are reasons that an Indiana bankruptcy attorney may recommend one or the other. Some of the reasons that a person may file an individual Chapter 7 or Chapter 13 bankruptcy are more obvious than others. In this blog I’ll review a few factors that are important to this decision, but keep in mind that each case is different and only your attorney can help you make this decision.
The most obvious factor to exclude your spouse and file bankruptcy individually is if your spouse has no debt or very little debt. This can be common if you are newly married and brought a lot of debt to the marriage as a result of divorce. It can also be as simple as the fact that one spouse had better credit, so all or most of the debt was incurred in his or her name. Nonetheless, it makes little sense to add a bankruptcy filing to your credit if you could pay off the debt. Let your spouse file and continue to pay on any debt you may have individually.
Next, divorce. Divorce is the reason for MANY bankruptcy filings. If you are already divorced, you cannot file a joint bankruptcy. However, even if a divorce has been filed (so long as it is not final as of the date of the filing of bankruptcy) a joint bankruptcy petition may be filed in Indiana. It often makes sense for those who are having debt issues to file a joint bankruptcy prior to their divorce so long as they are civil enough to work together with a bankruptcy attorney to file the bankruptcy. A Chapter 7 bankruptcy can wipe out debt so there are less issues to resolve in the divorce and bankruptcy can help exes accomplish a clean break. However, if either one or both of the people do not qualify for a Chapter 7 bankruptcy I would not recommend the joint filing of a Chapter 13, as its payments would tie the exes together for an additional 3 to 5 years.
Another reason I sometimes file an individual bankruptcy for a married person is that their spouse is inherently against bankruptcy and/or believes that it may hinder his or her employment. Everyone is entitled to their opinion regarding bankruptcy and there are certainly some people who disagree with the concept of bankruptcy and refuse to file at almost any cost. Others are concerned that the filing of a bankruptcy may limit their ability to obtain a security clearance necessary for employment or other licensing requirement for employment.
There may also be strategic reasons that you may want to file individually instead of jointly with your spouse. For example, maybe your spouse owes income taxes from the past few years which would be dischargeable in Chapter 7 bankruptcy in 1 year, but your paycheck is going to be garnished any day so you need to file bankruptcy now to stop the garnishment from taking 25% of your net income. Another example may be that your spouse is time-barred from filing bankruptcy. This means that he or she is not eligible to receive a discharge in bankruptcy due to a prior bankruptcy filing. For example, in Chapter 7 bankruptcy one cannot receive a discharge in a Chapter 7 filed less than 8 years after a previous Chapter 7 bankruptcy.
As you can see, a lot of thought and planning goes into a bankruptcy filing. A bankruptcy attorney can help navigate through not only the court hearing, but also the pre-petition planning that helps set up a successful bankruptcy filing. For those with debt issues living in Indianapolis, Fishers, Carmel, Noblesville, Tipton, Westfield or any of the surrounding areas I offer a free initial case evaluation to answer your questions and make a recommendation in favor of or against bankruptcy. To set up your appointment simply call 317-575-8222 or click here.
Halcomb Singler, LLP, is a debt relief agency. It helps people file for bankruptcy under the bankruptcy code. No attorney-client relationship with the firm of Halcomb Singler, LLP, is created through this blog. Also, please note that Erika Singler is an attorney licensed in Indiana and does not seek to practice law in any jurisdiction in which they are not properly authorized to do so. The information contained in this blog is general in nature and should not be relied upon for the circumstances of any individual(s) or businesses.