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Joint Debts in Bankruptcy

Before moving forward with a bankruptcy claim, married couples need to decide whether or not to file jointly or separately. Spouses may each have debts alone as well as debts that are shared. In addition, the type of debt can influence the kind of bankruptcy petition to be filed as well.

Joint Bankruptcy Advantages

A joint bankruptcy claim can be easier in many ways. First of all, spouses can share in a lot of the work involved. Also, the fees to file jointly or separately are just about the same. So by filing jointly, a couple saves the extra cost a second separate petition would incur.

Furthermore, a joint claim gives spouses the best protection for joint debt. If one spouse is a co-debtor and doesn't file bankruptcy, creditors may be able to go after the non-filer for the debt. With a joint claim, however, both spouses are potentially protected from the creditors.

Efficiency is another big benefit for a joint bankruptcy claim. By filing together, the amount of work needed for the claim is cut in half.

Joint Bankruptcy Disadvantages

Although there are many good reasons to file jointly, certain factors may make a single or separate filings more logical for a married couple. One obvious reason is one spouse doesn't want to file a bankruptcy claim. Another cause could be that one spouse has a previous bankruptcy filing within the last few years.

Chapter 7 and Chapter 13 bankruptcy claims have different rules. So depending on the past history of one spouse, a joint filing of either form of bankruptcy might not be possible. For instance, one spouse might not be eligible for a Chapter 7 debt discharge due to prior fraud charges. Another example could be that Chapter 13 will not work because one partner has a large debt that exceeds this type of bankruptcy's limits.

Planning a Joint Petition

Before you or your spouse file on your own, decide if a joint claim is right for you. Some courts may not let you add your spouse to a claim at a later date.

Other Co-Debtors in Bankruptcy

Of course, spouses aren't the only ones who are able to co-sign on a debt. Many people, especially those trying to build credit, ask a parent or relative to cosign on a loan. But under bankruptcy laws, only married spouses can file a joint petition. The good news is that Chapter 13's repayment plan extends the court's protection to any cosigners for a debt, and a debt discharged under this chapter protects cosigners from creditors.

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If you'd like more information on the advantages and disadvantages of a joint bankruptcy claim or discharging a joint debt, connect with a lawyer in your state today. Just fill out the form below to begin this easy process now.

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