A married couple considering filing for bankruptcy must decide whether a joint petition (filing together) is the right approach, or whether it would be best for one spouse to file alone. In most cases, a joint petition works well when both spouses are responsible for the majority of the debt. Apr 16, · Updated April 16, COVID Update: In response to the coronavirus outbreak, most bankruptcy courts remain operational; however, all courts have issued temporary orders modifying filing, hearing, and signing procedures. Visit your court website for details (links below). Finding the information you need to file a bankruptcy case can be daunting, especially when you’re already Author: Cara O'neill, Attorney. 2) Disadvantages of solo filing: Filing for one may not solve the family problems. If the non-filing spouse is left with so much debt that the family budget is still in trouble, then bankruptcy won’t make life much better in the long run. A solo bankruptcy may affect your spouse, especially if there are joint debts.
Related videosIf I File for Bankruptcy, Does my Spouse Have to File as Well?
Bankruptcy cannot, however, cure every financial problem. Nor is it the right step for every individual. In bankruptcy, it is usually not possible to:. You cannot receive a discharge in a Chapter 7 case if you received a discharge under a Chapter 7 case filed in the last eight years or a Chapter 13 filed in the last six years. You cannot receive a discharge in a Chapter 13 case if you received a discharge under a Chapter 7 case filed in the last four years or a Chapter 13 filed in the last two years.
Most people filing bankruptcy will want to file under either chapter 7 or chapter Either type of case may be filed individually or by a married couple filing jointly. In a bankruptcy case under chapter 7, you file a petition asking the court to discharge your debts.
But property which is not exempt is sold, with the money distributed to creditors. If you want to keep property like a home or a car and are behind on the payments on a mortgage or car loan, a chapter 7 case probably will not be the right choice for you.
That is because chapter 7 bankruptcy does not eliminate the right of mortgage holders or car loan creditors to take your property to cover your debt.
The most important thing about a chapter 13 case is that it will allow you to keep valuable property—especially your home and car—which might otherwise be lost, if you can make the payments which the bankruptcy law requires to be made to your creditors. In most cases, these payments will be at least as much as your regular monthly payments on your mortgage or car loan, with some extra payment to get caught up on the amount you have fallen behind.
You should consider filing a chapter 13 plan if you:. You will need to have enough income in chapter 13 to pay for your necessities and to keep up with the required payments as they come due. The court may allow you to pay this filing fee in installments if you cannot pay all at once.
Virginia exemptions provides list of the exemptions available for Virginia. In determining whether property is exempt, you must keep a few things in mind. The value of property is not the amount you paid for it, but what it is worth now.
Especially for furniture and cars, this may be a lot less than what you paid or what it would cost to buy a replacement. You also only need to look at your actual equity in any property. This means that you count your exemptions against the full value minus any money that you owe on mortgages or liens. While your exemptions allow you to keep property even in a chapter 7 case, your exemptions do not make any difference to the right of a mortgage holder or car loan creditor to take the property to cover the debt if you are behind on payments.
In a chapter 13 case, you can keep all of your property if your plan meets the requirements of the bankruptcy law. In most cases you will not lose your home or car during your bankruptcy case as long as your equity in the property is fully exempt. This means that you gave that creditor a mortgage on the home or put your other property up as collateral for the debt. Bankruptcy does not make these security interests go away. Bankruptcy is a legal process governed by federal law found in the U.
Bankruptcy also provides a way for creditors to be treated fairly. The debtor is the person or company who owes money, and the creditor is the person to whom the money or service is owed. A bankruptcy case begins when you the debtor pays a filing fee and files certain papers, called a petition, with the bankruptcy court.
You must provide financial information, including a list of all of your assets and debts. You must certify this information under penalty of perjury. Additionally, all debtors must now participate in consumer credit counseling with an approved nonprofit agency before filing a Chapter 7 or Chapter 13 bankruptcy petition. The law also requires that you provide the trustee with copies of your federal tax return for the tax year ending prior to the filing of the petition, along with certain copies of pay stubs.
However, in some cases, the bankruptcy court can grant the creditor permission to pursue collection activities, and for some matters, the automatic stay expires a few weeks into the case. Creditors, and sometimes a trustee, review the information you have provided, and they may file objections or other motions concerning your affairs. It is important for you to meet all the requirements of the trustee and the bankruptcy procedure on time or your case might be dismissed.
Eventually, if you have met the requirements, the court issues an order discharging the debts and your financial affairs and your case is concluded.
A trustee usually will not sell property on which a creditor has a lien, such as a lien on a car title or mortgage on a house, unless there would be money left over after paying off the lien. However, if the loan is not current, a creditor can often repossess the car or foreclose on the house after a short period of time. Chapter 11 is available to individuals and businesses that seek to reorganize their affairs or to liquidate in an orderly manner.
In Chapter 11, the debtor is allowed a certain period of time within which to propose a plan of reorganization, which sets the terms for payment of the debts under bankruptcy procedures. The terms of Chapter 11 plans vary, depending on the nature of the debts or the type of business the debtor operates, and creditors usually get to vote on the plan. Chapter 12 allows family farmers and family fishermen with regular annual income to adjust their debts. A debtor under Chapter 12 must have regular and stable income that enables him or her to repay creditors under a long-term plan.
By choosing Chapter 13, an individual debtor often may keep his property, stop home mortgage foreclosures, reinstate defaulted home mortgages and obtain a broader discharge of debts than is available in a Chapter 7 liquidation.
The debtor may be able to pay less than what is owed, or change the interest rate or number of months to pay. Ordinarily, the debtor makes monthly payments to the Chapter 13 trustee, who then pays the creditors according to the plan filed by the debtor, accepted by the creditors, and approved by the bankruptcy judge.
The debtor pays the trustee a set amount based on his monthly earnings from all sources, less fixed living expenses. Almost any person who has a residence, business, or property in the United States can file bankruptcy. Individuals, sole proprietorships, partnerships, corporations, and family farmers are eligible for bankruptcy relief. If you own a business that is not a separate corporation, you must include both your personal and business debts and property in your case. Generally, there are no minimum financial requirements for a debtor to file a bankruptcy case.
However the law now has certain financial requirements for filing a petition under Chapter 7. In that case, you may be required to use Chapter 13 where you must pay at least some portion of your debts. Chapter 7 is a liquidation bankruptcy -- the trustee takes control of your non-exempt property and sells it, giving the proceeds to your creditors.
But the bankruptcy allows you to safeguard some value in your assets by using exemptions. Joint Tenancy. The only time it usually makes sense to file for bankruptcy separately, without your spouse, is if you live in a common law state and debts you want to discharge are all -- or mostly -- your own. Some states allow you to double your Chapter 7 exemptions when you file together, so you can protect more property, but get legal advice to find out if this is necessary.
Beverly Bird is a practicing paralegal who has been writing professionally on legal subjects for over 30 years.