Married, can one file 7 and other 13?

[daytona]

Ok, I feel pretty good about my knowledge on means test, exemptions, and the like and the in's outs of CH7 and CH13. Where I get a little fuzzy is with a husband and wife scenario.

Lets say the one spouse has debts in their name only and is the primary earner (way above means test) and the other spuse has debts in their name only and works part time. Non community property state and there are no "co-debts" at all.

I can see where it could be advantageous for one spouse to file a CH7 and the other to do a CH13...my question is, can this be done?

[coolmom04]

I would think it can be done, but may be wrong. You said you feel pretty good about your knowledge of the means test... so you know you have to include both incomes when you both file separately?

[SMinGA]

Even if all debts are individual, a married couple can file a joint case. Where do you stand as a household: above or below state median income?

If you would be above on a joint filing, but 1 below (part time person) and 1 above (full time person) if using household of 1 median income as a base, I am guessing here but probably could do part time working spouse = 7, full time working spouse = 13. But the payment for the 13 would probably be the same as if you were filing together. My logic is based on how the part time spouse would have a NDI of ~$0, and the full time spouse would have a NDI of $X. So a payment to the 13 of $X. Which is the same as filing joint and having NDI of ($0 + $X).

Besides that - the 7 stays on credit for 10 years while the 13 is only on for 7 years. So by filing a joint ch. 13, it would be history sooner.

[BCA2009]

Even if all debts are individual, a married couple can file a joint case. Where do you stand as a household: above or below state median income?

If you would be above on a joint filing, but 1 below (part time person) and 1 above (full time person) if using household of 1 median income as a base, I am guessing here but probably could do part time working spouse = 7, full time working spouse = 13. But the payment for the 13 would probably be the same as if you were filing together. My logic is based on how the part time spouse would have a NDI of ~$0, and the full time spouse would have a NDI of $X. So a payment to the 13 of $X. Which is the same as filing joint and having NDI of ($0 + $X).

Besides that - the 7 stays on credit for 10 years while the 13 is only on for 7 years. So by filing a joint ch. 13, it would be history sooner.

I can't offer much help on the issue of one filing 7 and the other filing 13. Except that most people would rather file 7 than be locked into a 5 year payment plan overseen by a trustee. The only exception being if you are trying to protect some non-exempt property.

I would not even consider the 7 years vs 10 years on the credit report. You can rebuild your credit after 3 - 4 years. As a matter of fact, you could have your credit totally restored before you even got out of a Chap 13 plan.

just my humble opinion.

[catleg]

Right, I was thinking the same thing, the chapter13 is going to take household income into account. So the 7 doesn't do that much for you. It does make you debts go away faster, but you would get that anyway in a joint 13 eventually.

[blessed]

I see what you're saying SMinGA. But it seems more complicated than that. If one spouse files a no-asset Ch7 then they won't have to pay a penny back to their set of creditors. If those same creditors were included in the jointly-filed 13 instead they may get some money that they wouldn't have gotten in the 7.

[SMinGA]

From the starting post, I'm assuming they can't both file ch. 7. Either one has filed in the past 8 years, or household income/NDI is too high.

So I tried to answer the question - as to whether or not it would make sense for a married couple to file 2 different bankruptcy petitions.

[blessed]

Right, I assumed the same. IF you are allowed to file one of each like that I can see a benefit... I have no clue if it would work though! lol

[SMinGA]

But unsecured creditors/debt balance has no determination on the plan payment. It would be a difference of which unsecured creditors get some payment in a plan, not how much total is paid to unsecured.

I see what you're saying SMinGA. But it seems more complicated than that. If one spouse files a no-asset Ch7 then they won't have to pay a penny back to their set of creditors. If those same creditors were included in the jointly-filed 13 instead they may get some money that they wouldn't have gotten in the 7.

[SMinGA]

I guess the benefit might be that the one who files ch. 7 can start accumulating debt sooner. (Or rebuilding credit, depends on your viewpoint.) But if the 7 is filed by the part time worker, he/she won't be able to qualify for a mortgage or car without the income of the one who filed ch. 13, and the ch. 13 filer won't be able to take on new debt without trustee's approval....

I am assuming the full time worker is the one in the 13, as it would be hard for a part time worker to fund a plan...

[daytona]

Thanks for the comments...the thinking is get rid of the low income spouse debt entirely with CH7. The CH13 spouse is over the median and plans to include Lien strip on 2nd mortgage. (combined we are over median, about 95/5 split on household) The CH13 filer will be 100% repayment due to funds coming down the road that must be disclosed. This actually makes the CH13 must easier from a ttee standpoint, since it will definately be 100% payback and be over early in approx 3yrs. We could care less about 7yr vs 10yr.

Also, we are good on exemptions either way so that is not an issue. Additionally, we may be getting seperated shortly so I don't know how that factors if it happens.