A marriage should be a happy, exciting time in your life. However, finding love in the middle of a bankruptcy case can complicate your life, and especially your new marriage. If you remarry after the discharging of your debt, then your new relationship should not be affected much, if at all. If you remarry before or during the case, you may experience issues.
Qualifying for Chapter 7 Bankruptcy
Chapter 7 bankruptcy is commonly filed for by individuals when they seek to discharge debt. In order to qualify, a person must be able to prove that their income is not high enough to pay for your debt without creating an unnecessarily difficult life for yourself and any dependents. If and when you have been accepted by bankruptcy court, a trustee is is appointed to your bankruptcy estate to sell any non-exempt property to pay off your debt. Exempt and nonexempt designations on items vary between states and it is best to consult a Memphis, TN debt attorney to figure out which parts of your estate qualify.
What are the benefits of finalizing before remarriage?
Deciding to remarry after the finalization of your bankruptcy case is probably the best option for you individually and as a couple. Then both of you may enter the marriage without debt affecting you. If you do remarry before filing, then you may not qualify for Chapter 7. Since your new spouse will be able to pay towards your newly shared debt, the bankruptcy court may force you to take on a repayment plan available through Chapter 13.
Are there disadvantages to finalizing bankruptcy prior to remarriage?
Bankruptcy still appears on your credit report, so even if your debt was discharged, this will affect any joint credit applications you both make for the following ten years. The impact lessens as the years go by. Even though you may have two separate credit reports, any loans that you receive together will appear in their report as well and will affect their credit. Loans you receive will also possibly have higher interest rates and will likely be considered “subprime”.
It is probably best to just wait until after your case is finalized before remarrying. If you marry during the process or before it is fully closed, the trustee of your bankruptcy estate and your creditors may dismiss your petition. This is especially suspect if you have filed for Chapter 7, because now you have another person’s income to potentially help pay off what you owe. If this happens during the process, the court may force you into a Chapter 13 repayment plan to include your spouse’s monetary contributions, but they cannot do that if the case has been closed and finalized.
If you are considering marriage and are about to file for bankruptcy, it is best to get advice from a bankruptcy attorney. They can advise you specifically on your unique situation and you will be able to make an informed decision regarding your relationship. Most attorneys will offer a free consultation so you will be able to seek some advice without worrying about cost. Call today!
Thank to our friends and contributors from Darrell Castle & Associates, PLLC for their insight into bankruptcy law.