If you are married and considering filing for bankruptcy in Georgia, you can choose to decide whether to file for a joint bankruptcy petition or an individual bankruptcy petition. When you file a joint bankruptcy, you and your spouse file a single bankruptcy papers with the court. A joint bankruptcy petition may be the right option for you, or an individual filing could be better choice. Depending on you and your spouse’s particular circumstances, one or the other option will allow you to discharge more debts and keep more property. Below provides an overview of how a joint bankruptcy filed in Georgia works and what to consider before filing jointly.
What is a Joint Bankruptcy Petition in Georgia?
A joint bankruptcy is a single bankruptcy petition filed together by a married couple. [11 U.S. Code § 302]. In a joint bankruptcy, you have to disclose all debts owed by both spouses. You must include all joint debts and all debts owned individually by you and your spouse. The court can address the debt of both spouses in a single joint bankruptcy petition. At the same time, you can discharge both of your debts without needing to file two individual bankruptcies and paying the bankruptcy filing fee twice. Just like you debts, you must also disclose all property, income, and expense you own between you and your spouses. Whether you and your spouse own the property jointly or individually, all of your property becomes part of the joint bankruptcy.
Spouses do not have to file for bankruptcy as a unit. A joint bankruptcy may not be in their (or one of the spouses’) best interest depending on the amount of property each own, whether spouses have joint debts, and the exemption laws of the state in which the couple lives. For instance, as mentioned above, all of your property becomes part of the joint bankruptcy and this can potentially be an issue in a joint bankruptcy if one spouse owns a lot of nonexempt (you are allowed to keep your exempt property at the end of the bankruptcy process) separate property.
How Does Marriage, Divorce and Separation Affect a Joint Bankruptcy
Parties going through divorce are eligible to file a joint bankruptcy petition in Georgia, so long as the case is filed before the divorce is finalized. However, recently divorced couples cannot file a joint bankruptcy petition. Married couples that are living apart, even if they are under a Separate Maintenance order can also file a joint bankruptcy petition in Georgia. All marriages are treated the same under bankruptcy law in Georgia, including same-sex marriages, separated couples, and couples with and without children. However, larger families (with children) usually find it easier to file a Chapter 7 bankruptcy due to the family size in relation to the income of the parties under the Georgia bankruptcy means test. More information >>
Advantages of Filing a Joint Bankruptcy Petition in Georgia
Some of the advantages of a joint filing include: lower bankruptcy costs, eliminating all dischargeable debts, and efficiency. Bankruptcy filing fees are the same whether you file an individual or a joint bankruptcy. So, if both you and your spouse are considering filing for bankruptcy, you will save money on filing fees with a joint bankruptcy. In addition, if you wish to hire a bankruptcy lawyer, you will likely save a lot on attorney fees by filing a joint bankruptcy instead of two separate bankruptcies because attorney fees are typically much lower for a joint filing than two individual bankruptcies.
Another advantage of a filing a joint bankruptcy is that you can discharge all of your and your spouse’s debts through a single bankruptcy. If only one spouse files bankruptcy, the non-filing spouse is usually still liable for his or her separate debts and share of any joint debts. By filing a joint bankruptcy, you can eliminate all dischargeable debts owed by you and your spouse.
Moreover, Georgia allows married spouses filing bankruptcy to double their exemptions, a joint bankruptcy provides double bankruptcy property exemptions to you and your spouse for most assets. The federal / Georgia bankruptcy exemptions allow spouses to double exemptions for joint property. While some states do not allow married couples to double their exemptions in a joint bankruptcy, Georgia does. This is a significant distinction that can be a deciding factor if you are trying to decide whether to file a joint bankruptcy in Georgia or not.
Further, a joint bankruptcy is more convenient and efficient because it allows married couples to complete only one petition and attend all hearings together. When you file for bankruptcy, you must provide a lot of financial information to the court and the bankruptcy trustee and attend at least one mandatory hearing with the bankruptcy trustee (called the 341 Meeting of Creditors). If you file a joint bankruptcy with your spouse, you will go to the hearings together and provide only one set of bankruptcy documents. As a result, filing jointly with your spouse is usually more efficient and convenient.
Disadvantages of a Joint Bankruptcy in Georgia
There are also disadvantages you should take into account before filing a joint bankruptcy. Some of the disadvantages involve situations in which one spouse owns too much property or debt, one spouse has good credit, and where your state does not allow married couples to double their exemptions.
If one spouse owns a lot of separate property, it may be more advantageous for the other spouse to file for bankruptcy alone because any separate property of the non-filing spouse will not become part of the joint bankruptcy. For a spouse with significant assets may be better served by personally selling his or her separate property and using the funds to negotiate down payments with creditors. If spouses file a joint bankruptcy (Chapter 7), however, the bankruptcy trustee will collect any nonexempt assets owned by you and your spouse either jointly or individually, and may sell assets at a price lower than what you would have received if you sold them personally, in order to pay off creditors. Additionally, if the majority of the debt is in one spouse’s name, an individual bankruptcy by that spouse may be the better option.
Also, if you file a joint bankruptcy, it will be reflected on the credit reports of both spouses. So if you or the other spouse has good credit scores and one spouse needs to file bankruptcy primarily for his or her own debts, then it would not be in the other spouse’s best interest to file jointly and lower the credit scores. Keeping the other spouse’s credit intact benefits both spouses because his or her good credit scores will allow them to make necessary credit purchases such as vehicle at a reduced rate of interest in the future.
If you are married and thinking about bankruptcy, you and your spouse must decide whether to file bankruptcy individually or jointly. Determining whether or not a joint bankruptcy petition is the better option for you varies from case to case. You should consider the amount of property you and your spouse own, whether you have joint debts, and the exemption laws of your state. If you are not sure whether it would be best to file an individual or joint bankruptcy petition, it is advised to contact a knowledgeable bankruptcy attorney. You will have a better understanding of your situation and how it affects the decision you face by consulting early with an attorney.
Obtaining Assistance with a Georgia Joint Bankruptcy
If you are thinking about filing a joint bankruptcy with your spouse and have questions, call us at 770-609-1247 to speak to one our experienced Georgia bankruptcy attorneys. We offer free bankruptcy consultations in most instances.