Should an Indebted Individual With Minimal Income File for Bankruptcy if his or her Spouse has a High-paying Job?
There are all sorts of nuances to bankruptcy strategy and the bankruptcy process itself, especially if you have a spouse. One of the common questions posed to Santa Ana bankruptcy attorneys is whether one should file for bankruptcy if his or her spouse has a good job. The answer to this question hinges on a variety of factors. If you are in such a position and have an abundance of debt but little income, you should seriously consider filing for bankruptcy.
The issue of spouse’s income in the context of bankruptcy
Bankruptcy is an effective means of protecting a married couple’s assets even if both do not file bankruptcy. However, keep in mind that a spouse’s income is may affect the bankruptcy case. This additional income may make it difficult to qualify for Chapter 7 bankruptcy. It can also affect the amount one must pay to unsecured creditors in a Chapter 13 bankruptcy.
In some instances, one is liable for debts that his spouse incurred. However, in a community property state, both spouses may be liable for the debt. This means that creditors can come after the both incomes. Additionally, creditors can attempt to levy jointly held bank accounts.
If an individual has a similar situation, filing bankruptcy might prove to be the most prudent course of action as long as the individual meets eligibility standards.
The Matter of Bankruptcy Calculations
Attorneys include income from the household when determining what type of bankruptcy someone qualifies for. Therefore a spouse’s income will affect the type of bankruptcy you file. Furthermore, such spousal income is a component of the calculation of disposable income in Chapter 13 bankruptcy. The bottom line is if both spouses share the same household, the spousal income will be a factor in Chapter 7 and Chapter 13.
Marital Adjustment Deduction
However, there are deductions that can help debtors pass the means test. For married couples, a debtor can use the marital adjustment. It permits the deduction of a spouse’s personal expenses. The component of the spousal income that they do not use for the household.
Lean on the Experience of a Skilled Santa Ana Bankruptcy Attorney
It is clear that declaring bankruptcy is inherently complicated. This matter is made that much more complex when one is married. Do not attempt to solve this difficult legal puzzle on your own. Ally with a proven Santa Ana, CA bankruptcy attorney to help protect your assets and safeguard your financial future.
NOTE: This is for informational purposes only and does not constitute legal advice.