In a previous post we talked a little bit about filing bankruptcy without your spouse. We wanted to take a moment to go a little deeper, and to share more of the advantages that can be gained by keeping your husband or wife out of your bankruptcy case.
See also: End Debt, Save Your Marriage.
Here are three reasons why you might want to file alone.
Disposable Income
Disposable income matters a lot in a bankruptcy case.
It matters to the bankruptcy means test. Having too much disposable income can keep you from filing Chapter 7 even if you meet the income guidelines.
It matters to your Chapter 13 repayment plan, which basically takes all or most of your disposable income and flings it toward your debt.
When you file without your spouse any expenses which are not deemed to be household related, such as the non-filing spouse’s debts, can be subtracted from the household disposable income. This could mean getting to file Chapter 7 when you might not have otherwise been able to do so.
Receivables
Filing alone is especially useful if your spouse is expecting to receive proceeds from a personal injury action or an inheritance. Under normal circumstances, this money would become part of the bankruptcy estate.
Instead, it’s legitimately protected and available for your spouse to use on behalf of your family. In fact, if you know your spouse might receive an inheritance in the next six months filing without your spouse is the surest way to protect the asset. This money could allow you both to start over, or genuinely replace wages your spouse can no longer bring to the table.
See also: What You Should Know About Receiving Assets During a Chapter 13 Bankruptcy.
Breathing Room
Any debts your spouse co-signed will receive protection during the automatic stay. This may give you both the breathing room you need to pay the debt when the bankruptcy is done.
Remember, eventually the creditors will come back after the co-signer the moment it’s legally feasible to do so. It’ll be a good idea to at least get caught up with the debt if you can.
See also: Understanding the Automatic Stay.
Not sure if filing alone makes sense in your case?
Don’t make the decision now, on your own. It’s best to consider your full financial picture with the help of a qualified bankruptcy attorney.
This is an excellent question to bring to your free consultation, though. Ready to schedule yours? Call today. We’re available 24/7, and we’re ready to work with you and for you to bring you the financial relief you deserve.