Should You File for Bankruptcy before Getting Married?
Unfortunately, a lot of us are struggling right now, with job loss, health crises, and perhaps some financial mismanagement in our youth. Debts pile up, and it becomes impossible to keep your head above water.
One question we hear from people is whether they should file for bankruptcy before getting married or wait until after. Below, we explain why it is usually easier (and more sensible) to file before saying, “I do,” but everyone’s case is different.
It’s Easier to Qualify for a Chapter 7 Before Marriage
Most of our clients file for Chapter 7 because it is the faster bankruptcy. In a matter of months, you can wipe out most unsecured debts, things like credit cards, personal loans, and medical debt.
However, Chapter 7 is reserved for those who cannot pay their bills, and a person must pass a means test before they can proceed. This test is pretty simple: it compares your household income to the median income for a household of similar size in Florida. If you’re under the median, you automatically qualify. This means that, if you are married, you will need to include your spouse’s income in your “household income.”
For some people, they will no longer qualify under the means test once they include their spouse’s income. To pass the means test, they need to file while still single.
Bankruptcy Reduces Stress
As many studies show, financial problems are the leading cause of stress in a marriage, and coming into a union with debt could start you off on the wrong foot. In most cases, it makes sense to wipe the slate clean before getting hitched so that you can minimize the financial stress. Start building your financial future with your spouse without all this financial baggage.
You Might Wait to File if You Intend to Buy a Home
There are some situations where it makes sense to wait to file for bankruptcy until after you are married. For example, a couple might plan to buy a home. Any lender worth its salt will pull your credit history before extending a home loan, and a bankruptcy will disqualify most people.
Of course, your spouse could apply for the mortgage alone. But he or she might have weak credit or low income, which have sunk more than one applicant. If you want your income to count on the mortgage application, you’ll need to open your own credit history to inspection.
You should consider what will happen to your home if you file for Chapter 7 protection. Under the law, the trustee can take non-exempt property, and if you have just bought a home then some of the equity might not qualify as exempt.
Call Us to Walk through Your Options
Filing for bankruptcy is not a decision consumers should take lightly. Every case is unique, and what works for one person might not work for you.
The Plantation bankruptcy attorneys at Nowack & Olson PLLC has served the South Florida community for years, and we can analyze your options. Give us a call to schedule a free consultation at 888-813-4737.