Joint Property and Bankruptcy
If you are considering bankruptcy protection as a married individual you may have concerns about joint property and whether or not it can be protected from creditors. The outcome of your case may depend on the chapter you file, the state you live in, if you file on your own or with your spouse and ownership of property.
If You File Your Case Alone
If you choose to file bankruptcy you may qualify to file Chapter 7
or Chapter 13 bankruptcy
depending on your situation and qualifications. Each chapter offers exemptions that may help protect marital property. With Chapter 13 bankruptcy you make payments through a structured scheduled plan based on income that lasts 3 to 5 years. As long as you continue to make payments you'll be able to keep your property.
If You File Your Case Jointly
If you file your case jointly, either Chapter 7 or Chapter 13, all property between each spouse becomes part of the filing whether it is owned by one or both spouses. This includes outstanding debt; meaning both spouses can obtain a discharge and not be liable. Keep in mind, some states allow married couples to double exemptions or carry a certain amount of exemptions depending on the type of property.
If One Spouse Files for Protection
If one spouse files for protection only their debt and property will be part of the case. This may vary depending on the state you reside and whether it is a community property or common law state. Joint property is defined in a community property state that includes all items acquired during marriage. Any property acquired before marriage is considered separate property. Common law states allow married individuals to claim property acquired during marriage as separate if obtained by one spouse.
One spouse who files may qualify for exemptions to help protect marital property. Yet, you'll want to review exemptions available in your state prior to filing. In some situations, it's beneficial for both spouses to file to protect joint property.
Have Any Questions About Joint Property and Bankruptcy?
If you have any questions regarding joint property and bankruptcy we are here to help. Feel free to give us a call or fill out our contact form
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