A married couple in financial trouble should make every effort to pay off their bills and obligations. However, if they cannot pay their bills, they can consider filing for bankruptcy as a last resort. The process begins with the couple jointly filing a petition for bankruptcy in the bankruptcy court serving the area where they reside, according to Cornell University Law School.
Types
A married couple can select from two different types of bankruptcy procedures, according to the U.S. Bankruptcy Code. A Chapter 7 bankruptcy allows a married couple to obtain a discharge--or elimination--of most if not all debts. A Chapter 13 bankruptcy lets a married couple pay off most if not all debts through a payment plan supervised by the bankruptcy court.
Considerations
The primary consideration you and your spouse face in determining which type of bankruptcy is best suited to your circumstances is an analysis of your disposable income. Disposable income is income above and beyond that necessary to meet your most basic expenses. If you have enough disposal income, through protection from the bankruptcy court, you can manage the payments required of a Chapter 13 repayment plan. If there is no way to generate enough disposable income to pay off debts, you probably should file a Chapter 7 case.
Time Frame
In order to receive the full benefits of a bankruptcy case, you should file before you are in the midst of legal problems, including a home foreclosure. Being proactive allows you to deal with most of your debts in a manner that protects as many of your assets as possible.
Misconceptions
A recurring misconception is that only one spouse must file for bankruptcy and the protections of the case extend to both spouses. In fact, if only one spouse files for bankruptcy and obtains a discharge from certain debts, the other spouse remains responsible for these debts.
Expert Assistance
Due to the complexity of bankruptcy law and procedure, you should consider hiring an attorney to represent you and your spouse. The American Bar Association maintains resources to assist you and your spouse in finding a suitable attorney to represent you in bankruptcy.
References
- U.S. Bankruptcy Code
- Cornell University Law School: Bankruptcy Overview
- "The Glannon Guide to Bankruptcy"; Nathalie Martin; 2006
