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Should you file for joint bankruptcy with your spouse?

Married couples in New York have the option of addressing their debt burden by filing a joint bankruptcy petition. While this is a convenient way of eliminating debt incurred over the course of the marriage, it’s not a legal obligation. In fact, there may be times when separate filing is more beneficial.

How joint bankruptcy works in New York

When you and your spouse file a joint bankruptcy, both shared and individual debts are listed on a joint petition. This option can be beneficial for several reasons, such as:

  • You save time and money. When you file together, there is one set of fees instead of two and you can use the same bankruptcy attorney. The process is also much more rapid because the court doesn’t have to address separate petitions and you can take mandatory credit counseling classes and attend hearings together.
  • Two sets of debt are eliminated simultaneously. When you incur debt together but only one spouse files, the other one would be responsible for paying all marital debt, in addition to the debts they incurred on their own unless you file for Chapter 13, which protects co-debtors.
  • You can protect more property. When you file as a couple and have two incomes, you can qualify more easily for Chapter 13, which protects non-exempt assets from seizure because you repay some or all of your obligations over a three-to-five-year period. Even if you don’t manage to qualify, New York law allows married couples to double most exemptions if they have shared ownership in the property.

There are, however, potential disadvantages that need to be considered. If you or your spouse filed for bankruptcy protection in the past, then you usually have to wait before you can file again. The waiting period depends on what chapter was filed in the past and which one you want to file together now.

In addition, if you want to file for Chapter 7 because all of your assets are covered by an exemption, then a joint filing can make it more challenging to pass the means test. The means test examines your household income after all allowable expenses have been deducted to see if you qualify for Chapter 7. If your combined income causes you to exceed the median household income for New York State, then you may have to file for Chapter 13 instead.

Contact a New York bankruptcy attorney

If you are thinking about filing a joint bankruptcy petition with your spouse, then it is recommended that you meet with a New York bankruptcy attorney before making a decision. While a joint filing has several advantages, the potential disadvantages should be reviewed with an experienced legal professional first. Jayson Lutzky is a Bronx, New York personal bankruptcy lawyer with over 35 years of legal experience. He will help you make the right choices when you and your spouse are working toward a debt-free future. To set up a free initial in-office consultation, call 718-329-9500.

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