Joint Debts, Solo Filing: Chapter 7 Options in Kansas City
Filing for Chapter 7 bankruptcy may be an essential initial move for people drowning in debt. The process can appear more complicated when joint debts are involved, particularly when a spouse is involved. If you’re wondering, “Can I file Chapter 7 myself in Kansas City?” It’s important to know if you can handle shared financial commitments and file alone. Making an informed decision starts with understanding how Kansas City handles joint debts and the potential effects filing alone may have on you and your spouse.
Chapter 7 bankruptcy necessitates a careful evaluation of your situation because it can be complicated, especially when dealing with joint debts. The decision to file individually or jointly with your spouse might have a big impact on your financial situation.
Quick Summary
- Joint debts occur when two people, often spouses, are legally responsible for a financial obligation like a loan or credit card. Common examples include mortgages, credit card debt, and bank loans. Both parties are liable for repayment, regardless of who made the payments or incurred the debt.
- Chapter 7 bankruptcy offers quick debt relief without repaying creditors, making it popular for those with limited assets. However, individuals with significant assets risk losing luxury items or property, as there’s no repayment plan for overdue car or mortgage payments.
- Married couples in Kansas City can file Chapter 7 bankruptcy jointly or separately, depending on their financial situation. Filing jointly may offer more detailed debt relief by addressing both spouses’ liabilities while filing individually maintains financial independence but leaves joint debts at risk. Consulting a bankruptcy attorney is essential to deciding the best approach for managing joint debts and shared assets.
- To qualify for Chapter 7 bankruptcy, your household income must be below Kansas’ median income for your family size, or you must pass the “means test.” Even with higher income, you may still qualify if necessary expenses leave little for a Chapter 13 repayment plan.
What are Joint Debts?
Joint debt arises when you and another person, such as your spouse, enter into a credit agreement like a bank loan or mortgage. A financial obligation that two people are legally obligated to pay together is called joint debt. It is frequently referred to as matrimonial debt since it is more prevalent in married couples. If you have joint debt, you are not the only one who must pay it back. You are legally obligated to make payments if you and another individual are listed on the credit agreement.
Which Types of Debt Can Be Considered Joint Debt?
Various unsecured debts, including credit card debt, council tax, and other financial commitments, might result in joint debt. Gaining insight from these typical cases can make shared debt easier to understand.
- Mortgage: Particularly for family houses, mortgages are often taken out in both names. Although you and your spouse may choose to divide the payments, you are both legally liable for the amount owed to the mortgage lender.
- Credit Card Debt: A joint credit card account is a popular choice for couples to handle common expenses like shopping, utility bills, and vacations. If both partners sign the account, any debt accrued will be owned jointly.
- Bank Loans: It is not unusual for couples to take out joint bank loans to fund initiatives like home repairs. If creditors demand payment, both partners will be held legally liable, regardless of who started the initiative.
Why Do People File for Bankruptcy Under Chapter 7, and What are the Risks?
Since Chapter 7 bankruptcy may be completed quickly—usually in a few months—and does not include paying creditors back, it is frequently the option of choice for many filers. It’s particularly suitable for people who own mostly necessities for work and daily life. Significant asset owners, however, risk losing them since the Chapter 7 trustee, who oversees the case, might sell luxuries that aren’t necessary to satisfy creditors.
That means that if the equity surpasses what is protected, you might have to give up your priceless valuables, your vehicle, or even your house. In contrast to Chapter 13, Chapter 7 does not offer a catch-up payment plan for overdue car or mortgage payments. Hence, defaulting on those loans could result in the loss of the property.
Can Married Couples File Chapter 7 Jointly or Separately in Kansas City?
Depending on their circumstance, married couples in Kansas City may choose to file for Chapter 7 bankruptcy jointly or separately. Filing Chapter 7 bankruptcy can help eliminate joint debts, but when you’re married, there are important factors to consider, especially if you’re considering filing by yourself.
Filing Individually vs. Jointly
In Kansas City, you can file Chapter 7 bankruptcy individually, even if you and your spouse have joint debts. However, filing jointly may offer more comprehensive debt relief, as it addresses both spouses’ liabilities at once.
Impact on Joint Debts
If only one spouse files, creditors may still pursue the non-filing spouse for joint debts. This can leave the non-filing spouse responsible for paying off any remaining balances on shared accounts.
Protection of Shared Assets
Filing jointly may protect more of your shared assets, like property or savings, by taking advantage of both spouses’ exemption limits. Filing individually could expose more of these assets to the bankruptcy trustee.
Financial Independence
Filing individually allows one spouse to maintain financial independence, which can be helpful if only one person has significant debt. However, this approach may complicate joint financial arrangements, such as mortgages or car loans.
Legal Guidance
Consulting a bankruptcy attorney is highly recommended to determine whether filing jointly or individually is the best option. They can help assess the impact on both joint debts and shared assets.
How Do I Qualify for Chapter 7 Bankruptcy?
It should come as no surprise that filing for bankruptcy necessitates many requirements. Checking if enough time has gone since your last filing is important because you can only receive a discharge every few years. The waiting period varies based on the chapter you have already filed and which one you intend to file now.
If the gross income of your household is less than Kansas’ median income for a family of your size, you may be eligible for Chapter 7 bankruptcy. To determine this, add up all your gross income from the previous six months, divide it by two, and then check the result against the U.S. Website of the Trustee.
The Quick Median Income Test can be accessed online and available swiftly. When reducing necessary expenses from your income, you can still be eligible for Chapter 7 if you have little left to contribute to a Chapter 13 plan. If your income is too high, you may still qualify after completing the second part of the “means test.”
Call Our Kansas City Bankruptcy Lawyer Now!
“Can I file Chapter 7 myself in Kansas City, or should I file with my spouse for our joint debts?” Chapter 7 bankruptcy is complicated, and managing joint debts is one area where your situation must be carefully considered. The decision to file jointly with your spouse or individually might have a big impact on your financial future. It’s important to comprehend each option’s possible effects and legal implications.
Roach Bankruptcy Center, LLC offers a free initial consultation to help you explore your alternatives and decide on your financial path if you’re unsure about your circumstances or need guidance. Never be afraid to ask for the help you need to take back control of your financial destiny. Get in touch with our Kansas City bankruptcy law firm now!