Almost all consumers in America have been affected by the economic downturn, regardless of their marital status. Many married individuals have found that tough financial times equals an increase in stress and marital problems, and financial issues are one of the leading causes of divorce in the USA. The bleak outlook, uncertainty, and financial insecurity can combine to cause you to turn to bankruptcy, and this step can also have an effect on your future spouse as well. If you are planning on getting married what can you do if your intended is swamped in debt?
In many cases you can not be held responsible for debt that your future spouse has incurred, but this is not always true and in some cases you could find yourself on the hook for a debt as a result of your marriage. Consider the following hypothetical situation: Your new husband or wife owes $70,000 for debt on various credit cards plus some other debts that are unsecured. Your spouse earns $35,000 a year, which is less than the average median income in the area where you live. With only the income of your new or intended spouse a chapter 7 bankruptcy would be possible and the Means Test would be passed. If your income is $80,000 a year and you do not have any debt that is not secured then this could affect the outcome, and the Means Test may be failed because of the additional income that you bring in.
The Means Test is used to determine whether a debtor has the ability to pay back some or all of the debts in the bankruptcy case. If you can not pass this test then you can not file under chapter 7 of the bankruptcy laws, and you may have to file under chapter 13 as well. If your combined income is higher than the allowable income then you will fail the Means Test. The income considered with the Means Test includes family income, and any income of a spouse must be reported. This is true even if the spouse does not want to file for bankruptcy and does not have any unsecured debts that are owed.
In the hypothetical situation shown above the marriage would cause the spouse with debts to fail the Means Test and probably prevent a Chapter 7 filing. If chapter 7 is not possible then chapter 13 bankruptcy may be the only option left. Chapter 7 is a liquidation bankruptcy, but under chapter 13 you will have to utilize a repayment plan that lasts between 3-5 years. This means that you could marry yourself into the debt, and be forced to live by the repayment plan even if the debts are not yours but belong to the new spouse.
When bankruptcy is needed because of high debt amounts any marriage should be carefully considered and planned. An experienced and qualified bankruptcy attorney can advise you on the best timing for the marriage and the bankruptcy filing. It may be beneficial for the individual with the debts to file for bankruptcy before the marriage or even cohabitation. This may give a more favorable outcome to the Means Test and allow the debtor to file under chapter 7. On the other hand marriage can increase the household size, and this may offer advantages in some situations. The higher property exemptions allowed for married couples filing for bankruptcy can be beneficial for some individuals but not for others. It is important that debts and financial planning are addressed before you say I do, so you do not end up in divorce court in the future or end up acquiring a significant amount of debt.
If you are considering marriage and you or your intended have a large amount of unsecured debt then a qualified bankruptcy attorney can help advise you on the best timing for the wedding. For some couples marriage can complicate debt and financial matters and cause extreme stress but other couples may benefit by getting married before filing for bankruptcy protection. The bankruptcy attorneys at Richard West Law can help provide a free debt consolidation consultation to help you find the right answer for your unique debt problems and circumstances. Visit https://www.debtfreeohio.com or call (513)771-8700 or (937)748-1749 to get the answers you want, and the financial relief you are looking for.