Individual Bankruptcy vs. Joint Bankruptcy

If you and your spouse have gotten yourselves into a financial hole and are considering bankruptcy as a solution, you might be wondering whether it is better to file for bankruptcy individually or to do it jointly.  The answer depends on several factors in your personal situation that need to be examined before you file.

The skilled Ohio bankruptcy attorneys at Fesenmyer Cousino Weinzimmer understand that financial problems can happen to even the most well-intentioned people.  Bankruptcy is a legal way to have many debts forgiven and can put you on the road to financial recovery.  Filing can keep creditors from harassing you and seizing your possessions, allow debts to be forgiven, and provide a way for you to keep your assets and begin to rebuild your life.

We offer a free consultation to evaluate your financial situation.  We can help by looking at your income, your debts, your goals, and your marital situation, and developing a plan that’s best for you.

Chapter 7 or Chapter 13?

Most couples file for Chapter 7, the most common type of bankruptcy, but if your income is too high to pass the Ohio “means test” to qualify for Chapter 7, Chapter 13 may work for you.

Chapter 7 is a liquidation bankruptcy that will discharge (get rid of) your unsecured debts such as credit card debt and medical bills.  It is over quickly, so it can usually be completed before a divorce. You might have to sell property to help pay off creditors, but there are Ohio bankruptcy exemptions that list types of property that cannot be sold.  If you do not own a great deal of property, your possessions may all be exempt, qualifying you for a “no asset” case.

Chapter 13 bankruptcy results in a plan that consolidates and repays some or all of your debts over a three- to five-year period.   This plan is best for those who don’t qualify for Chapter 7, who have a steady income, temporary financial problems and a desire to repay some of the debt in order to keep an asset such as a car or a house.  If you successfully complete the court-approved payment plan, the debts covered by the plan are discharged.

Individual or Joint Considerations

There are several things you should consider in determining whether to file individually or jointly.  These include:

  • Debt — While you may feel that you and your spouse are responsible for one another’s debts, this is not always true.You each are responsible for debts you incurred individually.  It is when you have co-signed a debt together that you both are responsible for that particular debt.

Since Ohio is an “equitable distribution” state, if you file for bankruptcy together, your separate debts, your spouse’s separate debts, and the jointly-held marital debts will be eliminated. If you file for bankruptcy by yourself, your separate debts and your share of the joint debts will be eliminated, but your spouse remains liable for his or her share plus his or her own separate debts.

Therefore, if you have a lot of joint debt, it is usually better to file a joint bankruptcy.  However, an individual bankruptcy filing may be appropriate if only one spouse is responsible for the debt.  .

  • Exemptions – Under federal and Ohio law, people filing for bankruptcy have a list of exempt items they do not have to liquidate under a Chapter 7 bankruptcy or have considered among the assets under a Chapter 13 bankruptcy. In Ohio, property you are allowed to keep in a bankruptcy includes: some personal property such as a car, your homestead, pensions, public benefits, wages, and tools of the trade.

If you file jointly, you get double exemptions, as bankruptcy law allows married couples filing jointly to each claim a full set of exemptions. However, if one person has a significant amount of non-exempt separate property, then it may be best not to file jointly in order to protect those assets.  If just one spouse files, the non-filing spouse’s separate property is not part of the bankruptcy.

  • Costs – Since fees for filing bankruptcy are the same for joint and individual filings, filing a joint bankruptcy with your spouse saves court fees, and attorney fees will be lower than if each of you filed separately. It is also more efficient to file one joint bankruptcy because you only need to gather all the necessary financial documents once.

Contact Us For Help

Determining the rights and obligations of spouses considering bankruptcy in Ohio is complicated. Each bankruptcy is unique, and it’s important to have an assessment of your situation by an experienced attorney in order to ensure the best path is followed.

The seasoned and compassionate Ohio debt relief attorneys at Fesenmyer Cousino Weinzimmer offer a free consultation to evaluate your entire financial situation by looking at your income, your debts and your goals to find the best fit for you and your spouse.  We will make sure you are aware of all your options and help you decide on the path to a brighter future that makes sense in your individual case.  We understand what you are going through and will walk you through the process.

Delaying can only worsen your situation, so call the Ohio bankruptcy attorneys at Fesenmyer Cousino Weinzimmer today!  Call one of our conveniently located office branches at 614-228-4435 (Columbus), 937-222-7472 (Dayton), or 877-654-5297 (Cincinnati) or email for your free consultation so we can determine what debt relief solutions will work best for you.

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