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When you get married, it’s supposed to cover the gamut of circumstances – sickness and health, good times and bad. But most importantly, you signed on to love when richer or poorer. If you are contemplating bankruptcy, no doubt times are not great and you’re more in the poorer than richer category. Financial stress can tear a marriage apart, but filing bankruptcy can help give you a fresh start on your finances. Even if you’re one of those couples that do everything together, that doesn’t mean bankruptcy should be one of those things.
Consider these three important aspects of filing bankruptcy without your spouse:
#1 Wipe Out Individual, Not Joint Debts
When considering whether to file jointly or separately in bankruptcy, one of the things to consider is whose name is associated with the bulk of your debts. For instance, if one of you has been the majority breadwinner prior to your financial difficulties and most of your debts are in their name only, filing solely may be wise.
However, if most of your debts have both of your names on it, filing individually is not prudent because the other partner will then become the subject of the collection efforts. If one of you brought a ton of debt into a new marriage, a timely individual bankruptcy filing can clear out those older debts that belonged to just one person and allow you to get your new marriage off to a brighter financial future.
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#2 Protect Credit Rating of One Spouse
If you’re being crushed by debt that’s in just one person’s name, it’s likely that their credit is impaired from past due accounts, judgments and charge-offs. By filing solely, the other spouse will not see an impact to their credit rating. If one of you has decent credit, not filing jointly will leave you with one spouse with credit intact which can save you money in the future.
However, if your debts are in both of your names, you can’t afford to pay them and only one spouse files, the other spouse will likely continue to see their credit rating drop due to ongoing collection efforts. Considering how to protect the credit rating of at least one partner is an important consideration because higher interest rates will cost you more in the long run.
#3 Help Secure Individual Assets
If one spouse owns the lion’s share of the assets while the debts are mostly in the other spouse’s name, filing an individual bankruptcy can protect those assets. Because North Carolina is a “common law” state rather than a community property state, you have more latitude in preventing creditors and bankruptcy trustees from being able to apply your assets to debts in your case.
For instance, inheritances, individual checking and savings accounts, vehicles, real property and other assets in only one spouse’s name won’t be dragged into the bankruptcy if the other spouse files alone. There’s a caveat for bank accounts that you must know – if you paid joint debts from your individual checking or savings accounts, they may be dragged into the process.
Still Not Sure If You Should File Individually or Jointly?
If you’re not comfortable figuring out for yourself whether an individual or joint bankruptcy is the best alternative to maximize your debt elimination while minimizing depletion of your assets, consult a reputable North Carolina bankruptcy attorney. One of our experienced attorneys will sit down with you in a free consultation, review your financial particulars and then offer you our expert advice on the best course of action for you. Don’t hesitate another moment – contact us today - the sooner you call, the sooner we can help!