Married? Joint vs. Individual Filing

Married couples have a very important decision to make when filing for bankruptcy protection — should both spouses file or just one of them? There are many factors that must be considered in making this decision.

Debt

One of the most cruical factors to consider is whether the majority of your debt is held jointly or in one spouse’s name. We will pull a credit report on both spouses and thoroughly investigate your debt. It is important to make sure we have a complete understanding of where you stand with your debt so you can truly obtain the relief you need.

If one spouse holds the majority of the debt, it may be beneficial for only that spouse to file for bankruptcy. Remember, this will allow that spouse to discharge (eliminate) all of the debt held in his/her individual name, as well as his/her debt held jointly. It is important to understand that the non-filing spouse does not obtain personal debt relief from the bankruptcy. The non-filer remains accountable to pay his/her individual debt, as well as the remainder of the joint debt.

Assets

In Florida, property purchased during the marriage is generally held as tenancy by the entireties, unless the property is titled, in which case it is held as titled. Property held as tenancy by the entireties is not subject to individual debts, only to joint debts, so where there are substantial marital assets but only one spouse is indebted, an unlimited amount of property may be exempt from seizure by the trustee. If you are attempting this it is crucial that you hire good counsel. Failure to list all of the marital property may be seen as an intent to defraud, so you need a confident attorney who is comfortable telling the trustee where everything is, and why they cannot take it.

Transfers

Bankruptcy law prevents debtor’s from transferring assets before filing their case in order to avoid the property from being included in the bankruptcy estate. This is referred to as a “fraudulent transfer.” The trustee investigates all transfers of assets made up to one year before the bankruptcy filing. Thus, you cannot transfer title your home or car to your non-filing spouse in order to keep it out of the bankruptcy filing.

Married couples should discuss whether to file jointly or separately with a knowledgeable bankruptcy attorney. To learn more, call us to schedule a free consultation.


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