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The Pros and Cons of Joint Bankruptcy

If you and your spouse are struggling with debt, you have the option of filing individual or joint bankruptcy petitions. While many couples opt to file jointly, especially when they hold joint accounts or cosigned on debts for one another, doing so has pros and cons that need to be taken into account before reaching a decision.

Pros of Joint Bankruptcy

The advantages of filing for bankruptcy with your spouse are outlined below.

  • When you file together, it clears most debts for both of you. Most married couples are joint cardholders or have both spouse’s names on mortgages, car loans, lines of credit, and other debts. A joint petition will prevent creditors from pursuing the non-filing spouse for repayment (which can happen unless you file for Chapter 13 and protect them with the co-debtor stay).
  • If you have two incomes, filing as a couple makes it easier to qualify for Chapter 13, which eliminates the worry over non-exempt assets being seized. With Chapter 13, you repay some or all of your debts over a three-to-five-year period.
  • The process is more efficient because you complete a single petition and can attend all mandatory sessions like the meeting of creditors together.
  • A joint bankruptcy petition is less expensive because you’re only paying for one case filing instead of two.

Cons of Joint Bankruptcy

Joint bankruptcy also has its disadvantages. For example:

  • If one of you has already filed for bankruptcy in the past few years, it can cause a problem because U.S. bankruptcy law requires you to wait before filing again. How long you have to wait depends on whether the previous bankruptcy was Chapter 7 or Chapter 13, whether you received a discharge, and what chapter you intend to file now.
  • Not all states permit married couples to double their exemptions in a joint bankruptcy. In Oklahoma, you can protect more property in this manner, but in California, you can’t (with few exceptions). Some states, like Louisiana, don’t allow a double homestead exemption. Depending on where you live, filing individual petitions could allow you to protect more property.

Contact an Oklahoma Bankruptcy Attorney

If you and your spouse are thinking about filing for joint bankruptcy, your next step should be meeting with a bankruptcy attorney who can explain the advantages and disadvantages of this decision in your case. At the Law Offices of B. David Sisson, we will review your debt situation and financial circumstances before recommending a course of action that gives you the debt relief you need while reducing the risk of property loss. For more information, please contact us.