No one anticipates that their marriage will result in a divorce, just as no one anticipates that their financial life will result in bankruptcy. Going through a divorce or declaring bankruptcy are stressful enough on their own, but what if both are happening at the same time? For some people, divorce and bankruptcy will go hand in hand.
People who declare bankruptcy around the same time as they get divorced often find that declaring bankruptcy with their partner can have its advantages. Even if you and your spouse are eager to split as quickly as possible, you may find many benefits to declaring bankruptcy jointly.
A joint case can save money
Working together may not be an option for all couples, but those who are amicable can save some money by filing for bankruptcy together. When spouses declare bankruptcy together, it is referred to as a joint case. In a joint case, there is only one filing fee, one set of paperwork to fill out and one meeting with creditors.
Avoiding joint debt
If you share joint debt with your spouse, declaring bankruptcy before can absolve you from having to pay it. Declaring bankruptcy after your divorce, however, may not: Many divorce settlements require both spouses to share responsibility for their debts. Filing for bankruptcy on your own may release you from debt with your creditor, but a court could still order you to pay a hefty share in your divorce settlement. Conversely, if your spouse files for bankruptcy before the divorce, they could eliminate their liability on your joint debts and you may very well be stuck paying them.
Double your exemption amounts
Filing for bankruptcy doesn’t meant that you will lose all of your possessions. You will be allowed some exemptions in order to make a fresh start. Generally, exemptions are limited to a certain dollar amount, though this varies case by case. If you and your spouse file bankruptcy jointly, your exemption amounts can double. A larger exemption means more stuff that you and your spouse get to keep.