Getting Married? Why Should I file Bankruptcy Before Getting Married?

A lot of people can survive indefinitely while putting bankruptcy on hold. Filing for BK (bankruptcy) is not a “life threatening” matter in the traditional sense: in other words, it’s not an emergency. This is why we often see people putting it off for years. If this is you, don’t worry, it’s more common than you might think. In fact, we expect these sorts of situations. (Also see: Benefits of Filing Bankruptcy Now)

So why do people eventually file for bankruptcy?

Often it takes a serious situation to make one consider “Is NOW the right time to file (BK)?”

Impending marriage frequently motivates people to ask this question.

On one hand, there is financial incentive for a couple to get hitched: marriage provides couples with legal benefits. Some of these “benefits” include financial advantages such as: potentially lower combined tax bracket and tax-exempt transfers from spouse to spouse (Estate Planning).

On the other hand, these “advantages” can quickly turn to “disadvantages” if one or both parties is encumbered by numerous debts and liabilities.

Because of these complex legal issues, many people come to us asking “Should I file for Bankruptcy Before Getting Married?” 

So often that we thought it deserved a blog/video post…

Top 5 Reasons to File Bankruptcy Before Getting Married

1) Improves Your Chances of Qualifying for Bankruptcy
Keep in mind that getting married may reduce your chances of qualifying for BK. Filing bankruptcy requires calculation of the household income: after you get married, total household income includes your spouse’s in addition to yours (gasp!). You may no longer qualify. (Conversely, if you make too much income, adding a person that has no income, can help qualify you). 

2) Simplifies Your Finances
Once couples begin sharing expenses, usually one party will pay off an entire bill while it’s technically “split” in half. While this works in theory, on paper, your partner’s contribution(s) [Learn More About Contributions] could potentially look like YOUR “income.” Typical examples include: rent, utilities, phone bills. It is better to start early before your finances are combined to organize your income and your expenses to file bankruptcy based on that information. 

3) Protects Your (future) Spouse
Prevent creditors from garnishing your spouse’s wages, levy his/her bank accounts and assets. Once you are married in the State of California, your future assets and income are community property by default. Your creditors can seek to recoup their claims against your share of community property. For example, your wife’s bi-weekly paychecks are community property. Your creditor can then garnish your share of her paychecks, for debts you had prior to marriage. 

4) Allows you to start marriage with a “clean-slate” or fresh start.
Starting on a clean-slate both financially and metaphorically can be a super refreshing state of mind. Being dragged down by “baggage,” whether this is financial baggage or emotional baggage from previous relationships can be draining. The same way we need to shed our loose emotional baggage in order to succeed with a new relationship, we also need to shed our financial “baggage.” For many, this will also mean considering a BK (filing for bankruptcy). 

5) Give Him (or Her) Peace of Mind
So (we hope) you’ve spilled the beans about your financial situation. This can understandably cause concern for your future spouse. Concerned people are “anxious” people. He/She may not say anything, but a normal human will feel anxiety about the potential impact on their life: “what if my credit score gets decimated? Will they garnish my wages too? Will they take my house, or car?” These are reasonable concerns. Filing for bankruptcy can lift these doubts for you both. 

So what should I do?
We hope this article provides some food for thought if you’re thinking about marriage. While no two cases are alike, it can be dangerous to make your decision solely off of an article you read online. Each case is unique and these blogs do not attempt to replace solid ‘legal advice.’ As such, we recommend getting in touch with an actual practicing bankruptcy attorney if you have additional questions.

Here at our Bankruptcy Law Firm (The Law Offices of Chris T. Nguyen, APC), we offer all new clients a free 1 hour consultation, at no cost and no obligation, to you. 

If you are interested to claim your FREE CONSULTATION, please Click Here.