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The Law Office Of Barry R. Levine

100 Cummings Center
Suite 327g
Beverly, MA 01915

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(978) 355-1177

Call Us Now For A Personalized Case Evaluation

The Law Office Of Barry R. Levine

In this article, you will discover:

  • How your spouse’s income affects your bankruptcy case.
  • Why some property owned in marriage is safe from bankruptcy filings.
  • How to avoid paying too much on your Chapter 13 bankruptcy plan.

What Happens When A Married Couple Files Bankruptcy In Massachusetts?

Filing for bankruptcy in Massachusetts as a married couple is no different than filing as a single person. You still list your assets and liabilities, but they are for the couple instead of being for one person.

Over the decades, I have represented people who insisted their intended significant other file bankruptcy before getting married to get rid of their debts. But once you’re married, even if only one spouse files, the Court considers the household income, including both spouses, whether both spouses file or not. The assets, except for those jointly held, of the non-filing spouse do not enter into the equation.

Should Married People File Bankruptcy Individually?

It’s not necessary at all for married people to file bankruptcy individually. Why spend two fees when you get two for the price of one? A major change went into effect years ago to consider the whole household for a family’s income.

I recently had someone come to me, and their husband didn’t want to file. Through the course of the filing, it came out that the husband had his own debt, which was fairly significant. He was working out a debt resolution. I showed him the error of his ways and they filed a joint Chapter 7 which would have included his income whether he filed or not, so why wait!

It used to be we never got into reporting the whole household income. Even if the husband made $1 million, the wife could file. Nowadays, if he made that kind of money, it’d be a Chapter 13 whether he files or not.

Could My Spouse End Up Owing For My Personal Debts If I File For Bankruptcy Alone?

Your spouse will only owe for your personal debts if you file for bankruptcy alone if your spouse guarantees a debt. I had a gentleman consult with me. He had a lot of debt resulting from a failed business . . . Covid put the nail in the business’s coffin . . . and will be filing personal bankruptcy. His wife owned a house in another town by herself—he never had any interest in it. She recently sold it and has the money from it. He files bankruptcy, and her assets have nothing to do with it.

If it’s an asset owned by the spouse all along, then that’s that. On the other hand, it would be a different story if his name was on the title to the house and they took his name off within the last four years. It could be considered a fraudulent conveyance, but that is a story for another day.

Is Filing Chapter 7 Or Chapter 13 Bankruptcy Better For A Married Couple?

My preference is to file a Chapter 7 bankruptcy. Chapter 7 is cleaner, it will discharge all your debts, and you are not tied into a five-year plan. You don’t have situations like that with a Chapter 13.

I had Chapter 13 clients who were very diligent and paid their plan off in advance. The Chapter 13 trustee decided if they could pay off their plan in advance, they could afford to continue making payments. For another year and a half, they had to pay. They wound up paying their creditors and then some.

If you can file a Chapter 7, you should. I believe this to be the case even if you have mortgage arrears depending upon where your mortgagee is in the foreclosure process. By filing the Chapter 7, you will discharge all of your dischargeable debts. This should free up cash flow to make your mortgage payments. Presumably, you will be doing better with your mortgage if you have the same cash flow and be able to work something out on the arrears without having to file a Chapter 13. On the other hand . . .

I’ve done several of what they call Chapter 20s. For one client in Lynn, I filed a Chapter 13 bankruptcy after a Chapter 7 discharge of about $100,000 worth of debt. He had a problem with his mortgage (i.e. significant mortgage arrears). I filed the Chapter 13 for him, so he was able to start making his current payments while paying his arrears over five (5) years. Ironically, his mortgagee offered him a mortgage modification that would have resulted in a higher monthly payment and pushed the arrears to the sale of the real estate. His Chapter 13 has been confirmed and he is making his payments. The arrears will be paid off in 2026.

I just filed a bankruptcy for a couple with two or three years’ worth of arrears. They don’t have the income to keep the house, so a Chapter 13 would do nothing for them. But, if you have the income and want to keep the house, then the Chapter 13 is the thing to do.

With a Chapter 13 bankruptcy, you get into a five-year plan to liquidate your mortgage arrears, along with paying something to your unsecured creditors. With a Chapter 7, it’s more of a gamble when there are mortgage arrears because you aren’t sure if they will foreclose quickly. Still, my preference is a Chapter 7.

For more information on Married Couple Filing Bankruptcy in MA, an initial consultation is your best next step. Get the information and legal answers you’re seeking by calling (978) 355-1177 today.

Barry R. Levine

Call Us Now For A Personalized Case Evaluation
(978) 355-1177