Filing Joint Bankruptcies in Massachusetts
When filing for bankruptcy protection in Massachusetts, is it necessary to file jointly if you are married? The simple answer is no.
There is no Massachusetts law or federal bankruptcy rule requiring spouses to file jointly. Often one partner has significant debt and the other doesn’t. If John has sizable credit card debt and Suzie has no debt, and John qualifies, there may be no need to file a joint bankruptcy. This would have an unnecessarily bad result on Suzie’s credit, for no reason. But any credit cards that Suzie did have a legal responsibility for, she would continue to be responsible for, notwithstanding John’s bankruptcy and notwithstanding the fact that John may have been the one charging up the card.
However, it is important to meet with an experienced Massachusetts bankruptcy attorney to determine if you can actually save money, and get more protection, by filing jointly.
It is critical to examine the debts carefully. Often we undertake a bankruptcy for a client and then, sometime later, they reveal that some of the debts were joint and now they cant pay those either. We then have to do a second bankruptcy for the family, resulting in unnecessary time, legal fees and perhaps aggravation. For example, the new filing fee of $306 would only have to be paid one time if the couple filed together. Furthermore, a joint petition rarely costs significantly more than a single petition.
A reason to avoid a joint filing is when one spouse has already filed for bankruptcy protections within the last eight years. Then s/he can’t file so we can help only the party that has not filed within that time period.
Another reason to avoid filing a joint petition is when one spouse has assets that they do not want the Court to get a hold of. However, be careful, as many assets are protected, or can be protected with Massachusetts bankruptcy planning. These include personal homes, up to $500,000 and most retirement accounts.
One question we often get concerns the Means Test in Massachusetts. This is irrelevant as to a joint filing because we need to put in the family income on the bankruptcy petition. You can’t simply “file under my income” and avoid mentioning your spouses income. On the other hand, your attorney can work with you on the Means Test to your best advantage.
But what if the spouses have a joint mortgage? John can discharge his obligation and walk away from it if he files for bankruptcy protection, and he can hold off a foreclosure if he files. But Suzie can still be liable on the debt, and the foreclosure may still be able to proceed against her.
What about divorce? All too often we represent a Boston bankruptcy client who has just been through a divorce.
The good news is that filing for personal bankruptcy in Massachusetts is usually less painful than filing for a divorce. The bad news is that notwithstanding a full discharge from the bankruptcy court of all debts, the court cannot discharge you from any of the obligations in the divorce agreement. Those include alimony and child support, of course. But it also includes any agreement to hold your former spouse harmless from certain debts. Thus, while you may no longer owe Bank of America on the credit card, you may be obligated to compensate your former spouse if BOA comes after him or her.