Life has a habit of messing up even the best-laid financial plans. People get laid off from jobs and have difficulty finding a new one. Adults or children can develop a medical condition that, even with insurance, can cost an astronomical amount. Cars break down, houses need repair, children need clothes and everyone needs to eat. As one domino topples the next, you can find yourself staring up a mountain of seemingly insurmountable debt. When you stop answering your phone because the only ones calling are bill collectors and you start parking your car four blocks away so the repo men cannot find it, the idea of declaring bankruptcy might start flitting into your thoughts.
It’s not easy to make the decision to file for bankruptcy. And if you are married, you and your spouse will need to consider whether it’s in your best interest to file as a couple, or whether one spouse should file as an individual. To help make that decision, you and your spouse will want to consider whether the debts are primarily individual debts or joint ones.
Louisiana is a community property state which means that any debt acquired during the marriage, from credit card to car payments, are considered couples’ debt. Only debt you and your spouse had before marriage, such as student loans or a mortgage on an already purchased home, would qualify as individual debts.
It will also be crucial to consult with a lawyer to determine for what type of bankruptcy you will be filing. Chapter 13 allows you to keep your property while working out a way to pay off your debts. Chapter 7 will eliminate most of your debts but may require you to sell off many of your assets in order to pay creditors back as much as possible. That being said, there are eligibility requirements for both types of bankruptcies and if a couple chooses to file jointly, they may only be eligible to file for one type.
Declaring bankruptcy is not a simple, straightforward matter. A lot of factors will need to be taken into consideration. Your bankruptcy attorney will be familiar with the laws in your state and can help you walk through the pros of cons of filing jointly versus separately.