If you are married, you and your spouse can file a joint petition for bankruptcy. In your petition, you will have to disclose all the property, assets, income, expenses, and debts that you and your spouse have. All the property and assets will become part of a combined bankruptcy estate. The debts will include both your joint debts and your individual debts. When you file a single joint bankruptcy, you can wipe out your dischargeable debts without filing two separate bankruptcies. However, you should be aware that if only one spouse files for bankruptcy, the spouse who does not file might still owe individual and joint debts. If you are considering filing a joint petition, an experienced Alabama bankruptcy attorney at Grainger Legal Services can offer you knowledgeable advice and representation.
One advantage to filing jointly for Chapter 7 bankruptcy in Alabama is that you can double your exemptions. Exemptions permit you to protect certain assets and property from creditors in Chapter 7 bankruptcy. In Chapter 13 bankruptcy, they help determine how much you will have to repay creditors in your debt repayment plan. In some states, debtors can take the federal bankruptcy exemptions or choose between the federal and state exemptions. In Alabama, you must take state exemptions, although you can also use applicable federal non-bankruptcy exemptions that protect certain types of property like veterans’ benefits.
When you file for Chapter 7 bankruptcy in Alabama, you can keep any items protected by Alabama’s exemptions, and the rest may be taken to repay some of your debt. For example, Alabama’s wildcard exemption is often used to protect motor vehicles, since motor vehicles do not have their own separate exemption. If you double the wildcard exemption as a married person filing jointly, you can potentially have up to $15,000 available. You can split that between different items of personal property that are important to you and your spouse.
Moreover, the filing fees will be the same whether you file for bankruptcy as an individual or jointly. You and your spouse can save money on filing fees by filing a joint petition.
However, if only one of you files for bankruptcy, the other spouse may still be liable for separate debts and joint debts. Only if you file together can you possibly wipe out all of your dischargeable debts. Generally, you will both attend the hearings associated with bankruptcy.
Considerations may be a little different if you are considering filing a joint Chapter 13 bankruptcy. Certain debts in bankruptcy are considered priority debts. These include alimony and child support, and some taxes. These will have to be paid off completely in your repayment plan, even if only one of you owes the debt. For example, if you were married before, you may owe alimony to your former spouse, and your current wife could be on the hook for that in the debt repayment plan of a joint Chapter 13 bankruptcy filing. The result may be significantly higher plan payments. In such cases, it might be better for your spouse to file for an individual bankruptcy.
Each couple’s financial situation is different. It is important to seek the advice of a trustworthy Alabama bankruptcy lawyer if you and your spouse are determining whether to file a joint petition for bankruptcy or to file individually. At Grainger Legal Services, a debt relief attorney can represent you throughout this complex process. We maintain offices in Troy, Prattville, and Montgomery. Call us at (334) 260-0500 or contact us online to schedule a free consultation.