Before you plan to go for Joint Bankruptcy, know certain facts with their pros and cons so that it will help you decide whether it is a good option for you or not.
1) Want to know how Joint Bankruptcy works?
As the name suggests, in a Joint Bankruptcy Filing, you and your spouse together have to file only one set of documents. These documents that you submit to the Bankruptcy Court should contain all the information and details about both your spouse and yourself, relating to Income, Expenses, Debt, and Assets. Filing for a Joint Bankruptcy helps you to save a lot of money and time, as the work of two people is done together. A Joint Bankruptcy can together erase the dischargeable debts of the partners.
2) Effect of Bankruptcy on your Assets
What you need to remember is, in your Joint Bankruptcy Filing, you have to reveal all the assets that you and your spouse own. Even the Assets owned together. They will now all be a part of the joint bankruptcy. You need to also remember, that if the combined value of the assets that you own is more than the exemptions allowed in bankruptcy, it may lead you to problems. So you need to be cautious on the same.
3) Exemptions from Joint Bankruptcy
If you belong to a state that allows you to use Federal Bankruptcy Exemptions, and if while filing joint bankruptcy you elect to use Federal exemptions, then both you and your spouse may double up on your total exemptions.
4) Benefits that you get by filing a Joint Bankruptcy
The most important thing is, you save a lot of money. If two people file together, you get to save a lot on the filing fees. Also, you get to erase all qualifying debts. If you have to file for Bankruptcy, and your spouse doesn’t, then the non-filing spouse is still bound to their share of debts. You also get to save on a lot of time, as each filing requires to have in-depth documents, and you need to attend at least one hearing with the bankruptcy trustee. So by filing jointly, you will have to submit only one set of documents, and the hearing can be attended together.
5) Can you Lose by filing a Joint Bankruptcy?
The most important thing that you may lose, in case of a joint bankruptcy, is Exemptions. If one spouse owns too much property separately, then exempting all of the spouse’s combined assets may not be possible. If this kind of situation arises, then it is beneficial for the spouse with lower value assets to file for Bankruptcy separately. Also, remember to pay priority debts in full. Even if one spouse has a lot of priority debts (taxes, family support payment, etc) then before filing for Chapter 13 Joint Bankruptcy, that needs to be paid in full, even when the other spouse dies not to owe that debt. This at times results in very high plan payments.
Though Joint Bankruptcy is a good option, at times, you should consult a good Attorney before filing for one. With a lot of pros, it also has cons.
You can also contact Recovery Law Group from Los Angeles & Dallas, TX for the Same.
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