Money problems can cause friction in relationships, and these problems can sometimes result in the relationship becoming fractured. If couples are divorcing, and they have financial problems, the lawyers for the couple will often recommend the couple file a bankruptcy case. Because of expense, many lawyers will advise that the divorcing couple file a joint bankruptcy case.
In theory, this is a good idea. Filing one joint bankruptcy case will cost one-half of the cost of each spouse filing their separate, single bankruptcy case. Cost-saving is very attractive! But in most cases, if there’s a need for a couple to file a bankruptcy case, two separate cases should be filed. Why?
How Joint Bankruptcy in MN Treats the Role of Creditor
First, the couple might be each other’s creditor. One spouse might owe the other child support. Or spousal maintenance. Or a cash payment on a property settlement. While these obligations may not be discharged in bankruptcy, it can be awkward for a debtor to file a bankruptcy case as a joint debtor with one of their creditors.
Difficulty Determining Property Value in MN During a Divorce
Second, any bankruptcy case filed will contain the debtors’ statement regarding ownership of property and the value of property. All sorts of property has to be valued: real estate, personal property, vehicles, business interests. When bankruptcy papers are ready to file, bankruptcy debtors sign a declaration saying that the information in the papers is true and correct. So if there’s a joint bankruptcy case, both debtors need to know that the values assigned to property in the bankruptcy schedules will govern the values determined in the divorce case. If there’s any disagreement as to property values at all between spouses, we’ve got a significant problem with filing a joint bankruptcy case.
This doesn’t mean that filing a joint case is impossible – but both spouses should approach a joint bankruptcy case very, very cautiously.
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Is filing jointly or singly a good idea? Talk to one of the experienced, kind and professional attorneys at Kain & Scott to find out. Book a free consultation at: www.kainscott.com