For Debtors who are married or even considering marriage, there are a number of issues that do not arise in cases involving single individuals. Some of these issues arise in cases where debtors are happily married and others where the marriage is distressed. In fact, some of the issues may be an early sign of marital problems. Resolving financial issues can also help with marital problems by resolving debt issues which are a common source of marital stress.
For those Considering Marriage
For individuals who have debt issues and are considering marriage or who are considering marriage with someone who has debt issues should definitely consider discussing the situation with a bankruptcy attorney before the marriage. In some instances, the marriage can affect the Debtor’s ability to obtain relief in bankruptcy. Some individuals may have difficulty qualifying for a Chapter 7 due to the means test when married because their spouse’s income must be counted for the purposes of qualifying for bankruptcy if they are married at the time of the bankruptcy filing. On the other hand, the added person in the household may make it easier to qualify pursuant to the means test. While simply being married to someone does not make one responsible for their debt under Florida law, some joint assets may be subject to the collection activities attempting to collect the debt of one spouse.
For Those in Intact Marriages
Where there are financial problems, one option to improve the marriage may be to consider a bankruptcy to relieve this form of financial stress. This could be particularly effective coupled with counseling to deal with the underlying issues.
Individuals who are married can file bankruptcy separate from their spouses if they choose to do so. A spouse’s income must still be taken into consideration for purposes of the means test. Depending on whether the spouses have joint debts, there may be a special marital exemption for property held jointly and obtained during the marriage. This exemption would only be available to spouses not filing jointly. Spouses should carefully consider whether the obtain any joint debt. Having on spouse file alone may help the marriage re-establish credit. However, often when a spouse files separately, the other spouse is still forced to file later. This results in greater expense overall and may delay effective relief for the marriage.
Individuals who are married should also carefully consider the health of their marriage in making a decision as to an individual filing. Assets are divided in Florida based on a concept called equitable distribution. A spouse who is being strongly encouraged to file alone by the other house should consider whether the opposing spouse may be able to obtain a greater share of the assets. The spouse that does not file bankruptcy would have all of the debt moved to their side of the balance sheet, potentially entitling that spouse to a greater share of the marital assets.
For Divorcing Spouses
One of the most significant issues in many dissolution cases is the division of joint debt. Some who have significant debt file bankruptcy as a part of the process in order to eliminate the issue. While a dissolution judgment will frequently allocate the debt to one spouse, this does not prevent the creditor from suing the other spouse if the “responsible” spouse fails to pay. In a Chapter 7 case, the responsible spouse cannot avoid liability for the debt but this may be of little comfort to the other spouse who may remain unable to force the “responsible” spouse to pay. The “responsible” spouse can also avoid the debt by successfully completing a Chapter 13 bankruptcy. It is also important to keep in mind that the debt will continue to affect both spouses credit until it is paid, showing as debt due for both spouses for credit purposes, even if only one spouse is assigned to pay. Anyone who is responsible for debt that is to be divided in a dissolution case may want to discuss the situation with a bankruptcy attorney before allowing a spouse to take responsibility for joint debt. An additional option would be to require anyone taking responsibility for marital debt to refinance the debt. However, the parties may lack the credit or assets to refinance the debt.
In virtually any marital situation where debt is involved, good advice can be very valuable. Anyone contemplating marriage, divorce or filing alone during a bankruptcy may benefit from a consultation with an attorney who understands the interaction between bankruptcy and family law.