Should you file Wilmington bankruptcy together?
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For those Wilmington consumers stuck with unaffordable debt and considering bankruptcy, it’s important to understand how your decision will affect your spouse. When you’re married and file bankruptcy, you have the choice to file as an individual or as a couple. Just because you joined your lives in matrimony doesn’t mean you must be joined in bankruptcy. In fact, filing without your spouse may be more beneficial. Here’s what you need to know.
The Goal of Bankruptcy
The end goal of most bankruptcies is to get the filer out of debt. In some cases, there may be a specific purpose that is not to clear out debt but to stop a foreclosure or repossession without following all the way through to a bankruptcy discharge. This is more common with Chapter 13 since a Chapter 7 bankruptcy is difficult to stop once the ball is rolling.
Chapter 7 bankruptcy wipes out unsecured debt like medical bills, credit card debt, signature loans, and some older income taxes. Chapter 13 bankruptcy puts you on a repayment plan to catch up on past due balances for secured debt like a mortgage or your car note. Either Chapter 7 or Chapter 13 Wilmington bankruptcy can be filed jointly or individually depending on your needs and goals.
Filing Joint Bankruptcy with Your Spouse
If your debts are mostly shared, then filing joint Wilmington bankruptcy will likely make the most sense. In this day and age, though, there aren’t many couples that have joint credit card accounts. In some cases, a mortgage might be a joint filing, but car loans usually are not. However, even if your debts aren’t mostly joint, there are circumstances where joint bankruptcy is still preferable.
Joint may be better if you both have individual debt and both of you are behind on your bills and can’t afford your debt. In this case, you could file separate individual bankruptcies or one joint bankruptcy, but it’s cheaper to file a joint bankruptcy. Alternately, if you have a mix of joint and individual bankruptcy and are behind on all of it, then joint bankruptcy can be the way to go.
Filing Individual Bankruptcy Without Your Spouse
Another approach to Wilmington bankruptcy is individual bankruptcy where you file without your spouse. Since North Carolina isn’t a community property state, your debt is yours, and your spouse’s is theirs even if the debt was taken on during the marriage and you benefited from the debt. In some cases, one spouse may have the bulk of the debt in their name because they’re the primary earner.
In other cases, you may have fallen behind on debt in your name while your spouse was able to keep up with their payments due to circumstances, priorities, etc. In this case, choosing individual Wilmington bankruptcy might be the best way to go. Why? When you file bankruptcy, your credit score will take a temporary hit, but your spouse’s credit will be shielded. This can be greatly beneficial.
Avoid Property transfers to your spouse before bankruptcy
If you’re considering filing individual Wilmington bankruptcy and leaving your spouse out of it, you might want to try and shield some of your assets by transferring them to your spouse. You cannot do this, or you could be accused of bankruptcy fraud. You should also know that filing individual bankruptcy can shield your spouse’s credit score, but not in every case.
For instance, if your spouse’s name is on a debt that’s involved in your bankruptcy or if one of you co-signed the other’s debt, once you file bankruptcy the creditor can pursue the co-signer or co-owner of the debt because your bankruptcy doesn’t excuse the other obligation for the debt. The best approach is to talk to an experienced North Carolina bankruptcy and get advice on your unique circumstances.
To find out more about the benefits of North Carolina bankruptcy, contact the Law Offices of John T. Orcutt. Call +1-919-646-2654 now for a free Wilmington bankruptcy consultation at one of your locations in Raleigh, Durham, Fayetteville, Wilson, Greensboro, Garner or Wilmington.