Bankruptcy: Should I file before or after I get married?

The following is not intended as legal advice. For legal advice, including advice related to bankruptcy, please consult with a licensed attorney. 

I am getting married soon, but I also need to file for bankruptcy. Would it be wise to file before we are married or wait till after? She has okay credit and I don't want it to affect her credit. —Chad

Hi Chad,

Filing for bankruptcy is a difficult and complicated process. If that’s a path you want to pursue, your best first step is to speak with a qualified attorney. They’ll be able to most accurately walk you through the unique consequences for your circumstances.

Speaking generally, however, there are a few things we do know about bankruptcy that you can consider before you begin that conversation with your attorney.

You can always file as an individual

Regardless of whether or not you’re married, you will always maintain the option of filing separately as an individual. So simply because you’re married does not mean your new wife will have to participate in the bankruptcy.

When you file as an individual, your spouse, their debts, and their assets are not included in the bankruptcy. If you have joint accounts, they may be discharged as part of the bankruptcy, which would most likely have an impact on your spouse’s credit. If you’re married and choose to file for bankruptcy as an individual, it’s important that you understand which accounts are solely yours, which are solely your spouse’s, and what will happen to any joint accounts you may have.

Chapter 7 vs. Chapter 13

You may have the option to file for Chapter 7 bankruptcy or Chapter 13 bankruptcy.

Chapter 13 is the most common and is often referred to as a wage-earner plan. In a Chapter 13 bankruptcy, you are assigned a repayment plan based on your available disposable income. You get to keep all of your property and assets as long as you continue to make the assigned payments for the required amount of time, usually 3-5 years.

Chapter 7 bankruptcy, on the other hand, is a liquidation of debts. Here your non-exempt assets and property are sold with the proceeds being used to repay your creditors. If you have any joint property with your spouse, that property could be included, however, that depends on the laws of the state where you file.

The aftermath

So, if you file for Chapter 13 bankruptcy, your credit will take a major hit (a Chapter 13 bankruptcy will stay on your credit report for 7 years) and you will have an ongoing debt repayment bill for the next 3-5 years.

If you file for Chapter 7 bankruptcy, your credit will also take a major hit (a Chapter 7 bankruptcy will stay on your credit report for 10 years) and all of your nonexempt assets (anything not considered a necessity) will be sold.

Now whether or not you want to go through that process before or after your marriage is up to you. Talk to your future spouse. Do you have any short-term or long-term goals that may be impacted by your decision? Is it better to start immediately, or are there any reasons why you would be better served waiting for a bit? Are there potentially other options that better fit your shared goals?

No matter which option you choose, filing for bankruptcy can be a lengthy, painful process. It’s a difficult thing to go through alone, so strive to keep the lines of communication open.

Good luck!

Jesse Campbell is the Content Manager at MMI, focused on creating and delivering valuable educational materials that help families through everyday and extraordinary financial challenges.

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