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What to Expect From a Joint Bankruptcy?

What to Expect From a Joint Bankruptcy?

​​​​​​If you and your spouse have exhausted every possibility in resolving debt on your own, it may be time to consider joint bankruptcy. Joint bankruptcy can allow you to get rid of your debts and enter the future with a clean financial slate. Here are some things to consider when deciding to file for joint bankruptcy:

What Debts are Dischargeable?

When filing for bankruptcy as a married couple, both spouses must list both individual and joint debts. While filing jointly can wipe out dischargeable debts, the types of debt you have — whether owned jointly or individually — can help make the determination of whether filing jointly is the right bankruptcy option. A bankruptcy attorney can look at your debts and financial situation to make that determination. However, if joint bankruptcy is the right option, the following may be discharged in each of these types of bankruptcies:

Chapter 7, also known as liquidation or straight bankruptcy, is structured to eliminate unsecured debt. The following unsecured debt may be discharged under Chapter 7:

  • Credit card balances
  • Payday loans
  • Medical bills
  • Back utility bills
  • Personal loans
  • Broken cell phone contracts
  • Prior car repossessions
  • Debts owed to previous landlords
  • Broken cable or internet contracts
  • Overdrawn bank accounts
  • Stop garnishments

Chapter 13, also known as wage earner’s plan or debt reorganization, is structured to give individuals who have assets a way to maintain their assets.

  • Foreclosures
  • Vehicle repossession
  • Some taxes debts
  • Unsecured debt
  • Stop garnishments
  • Student Loans – Student loans are generally not dischargeable in bankruptcy, but they may be placed on hold while you address your other debts. Once a filer has discharged their general unsecured debt and paid off their non-dischargeable debts, most filers have room in their budget to resolve their student loan debt.

Filing bankruptcy jointly may allow you to double the exemptions, which means you have the opportunity to keep more of your property.

How Does Joint Bankruptcy Affect the Means Test?

Whenfiling for bankruptcy with your spouse, you must take into consideration how filing jointly can affect the “means test.” The means test is an evaluation of your current financial state and measures if you have enough disposable income to repay your debts. If the results of your means test show that your combined marital income gives you enough disposable income to repay your debts, you may be ineligible to file for Chapter 7 bankruptcy. In this case, Chapter 13 will be your best option in resolving the debt.

While this is not an uncommon obstacle for many married couples, a seasoned bankruptcy attorney can help guide you in the right direction to determine the best course of action in resolving your debt.

Why it’s Critical To Consult a Bankruptcy Attorney

Bankruptcy law is both intricate and complicated. While you and your spouse may want to embark on handling your own bankruptcy case, you’ll be expected to know bankruptcy law as well as understand how to file your bankruptcy petition correctly. Submitting incorrect and incomplete information could cause you to lose your case. From harassing debt collector calls to wage garnishment, having an accomplished bankruptcy attorney on your side can help with the most complex of debt situations.

Every married couple’s financial condition is unique. If you and your spouse are considering joint bankruptcy, it’s best to consult an experienced attorney that can advise you on the best strategy tailored to your situation. Contact Moore & Associates, LLC today to learn more about bankruptcy and our no cash upfront options.

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