Planning to Get Married? You May Want to Consider Bankruptcy
Getting married can be a wonderful experience. What is more wonderful than two people falling in love and deciding to spend their lives together? But while you are planning your wedding, take a moment to consider your financial future. Your future spouse may come with financial baggage that affects you detrimentally, and makes married life less than perfect.
Consider this example. Bill meets Hillary; they fall in love, and decide to get married. Hillary earns a modest income of $35,000 a year and has credit card debt in the amount of $20,000. In Texas, Hillary would qualify for relief under Chapter 7 of the Bankruptcy Code. In a few short months she could completely discharge her debt, allowing her to start married life with a clean financial slate. Bill earns $50,000 a year and is debt-free.
After getting married, Bill soon realizes that Hillary's credit card debt is creating financial difficulties for them. They consult a bankruptcy attorney to see if Hillary can file bankruptcy and discharge this troublesome debt, and find out that they don't qualify because their income is too high. The Bankruptcy Code requires that household income be considered when determining whether a debtor is eligible for a discharge under Chapter 7. Bill may not be liable for Hillary's debt but his income will be considered in determining whether Hillary has the ability to repay the debt and whether she is eligible for Chapter 7 bankruptcy.
Their bankruptcy attorney is going to suggest that they file Chapter 13 bankruptcy instead. In Chapter 13 bankruptcy, the filer makes a payment each month to a trustee who then pays the money to the creditors listed in the bankruptcy. This type of bankruptcy requires that a portion of the debt be repaid, and based upon Bill and Hillary's household income, unless they have unusually high expenses that can be applied as deductions in their case, it is likely that they will have to pay back all of Hillary's credit card debt. Chapter 13 bankruptcy is a much better solution than not filing bankruptcy because it stops the credit card debt from accruing interest. However, Chapter 7 bankruptcy would have been better because under that type of bankruptcy relief they would not have to repay the debt.
If Bill and Hillary had read this article, hopefully they would have called a bankruptcy attorney before they were married. Hillary could have filed Chapter 7 bankruptcy, received a discharge in three to four months, and entered married life free of debt. If you are planning on getting married, and have debt, while you are picking out wedding cakes, flowers, and invitations, consider meeting with a bankruptcy attorney as well. Your future spouse will thank you.