You’ve done your best to keep your head above water, managed your debt to the best of your ability and finally come to the realization that it is time to declare bankruptcy and get a new start for you and your family. One of the first decisions that married couples need to make when planning for bankruptcy is: Should you file individually or jointly as spouses?
Each bankruptcy situation is different, which is why you should hire the only nationally-certified bankruptcy lawyer in Northwest Montana to help guide you through the process, but here are few things to start thinking about as you plan for bankruptcy.
Joint filing is not required by law
The bankruptcy code does not require spouses to file bankruptcy together. When one spouse’s debts are discharged creditors can no longer collect from that individual. Spouses are generally not liable for the individual debts of the other spouse. But, creditors can, and probably will, come after your spouse if your spouse co-signed for the debt. Your spouse may have to pay for any joint debts and joint property may be affected by the bankruptcy.
Both spouses are liable for joint debt
When a married couple wants to discharge debts for which they are both liable, then they should file jointly. Otherwise, creditors will simply demand payment for the entire amount from the spouse who didn’t file.
File individually if all debts belong to one spouse
If you are one of those married couples that keeps their finances, including credit accounts, separate, then it is generally better for the debtor spouse to file and leave the other spouse’s credit intact. You can also do a variation of this option: file individual bankruptcy and then wait and see if any creditors come after the non filing spouse. If the creditors do come out of the woodwork and spouse #2 needs to file, we may be able to use some or all of the work product from spouse #1’s case and hold down the case cost.
Automatic stays for joint debt
Though an automatic stay goes into effect the moment you file for bankruptcy in Montana, which means no more constant calls and creditor harassment, if you and your spouse are co-debtors, your spouse may or may not be protected under the automatic stay.
Bankruptcy blogs will only get you so far in bankruptcy planning. If you are tired of the phone calls, tired of treading water, tired of sleepless nights and are ready to put your financial woes behind you, contact the law office of James H. Cossitt in Kalispell, Montana – Jim is board certified in both business and consumer bankruptcy law and provides sound legal services to clients throughout the Flathead Valley and Northwest Montana.