by Adam Mack, J.D.
Hillary Stirling, research assistant
You and your love interest decide to get married before they file bankruptcy.
WHAT COULD GO WRONG
It’s good advice to consult an attorney before getting married, regardless of the circumstances. If one or both of you are considering bankruptcy, it’s more important than ever. If your partner earns a high income, it could potentially change the type of bankruptcy you could file – or even keep you from filing. One example I’ve encountered is when a boyfriend and girlfriend decide to marry and the girlfriend chose to file before the wedding. She filed a Chapter 13 because she’s behind on her car payments. The boyfriend also has large medical debts due to car wreck and decided he wanted to file a chapter 7. By filing separately, it would waste a lot of money that could have been saved by filing jointly. Conversely, sometimes the better strategy is to file separately – it all depends on your unique financial, familial, and personal circumstances.
Making the choice as to whether to file before or after you get married can be critical in protecting your property, especially if you have commingled assets. One unmarried couple I know of bought a vacation property together and a couple of years later the boyfriend needed to file bankruptcy. Because both of their names were on the vacation home, the trustee had the right to administer (sell) the interest the boyfriend/husband held in the property.
On the flip side, suppose a woman with two children marries a man with large medical debts. As discussed elsewhere, a portion of your tax refund is not exempt, and in our scenario, the man’s typical tax return would be a few hundred dollars. If he filed bankruptcy later in the year (after marrying and acquiring his new family/tax dependents), he may lose most of that while single, but he still wouldn’t be out much. However, if he gets married, then his tax return will likely be several thousand dollars, and much of which may be lost if he filed bankruptcy.
Another consideration for unmarried bankruptcy filers who have domestic partners is the fact that Kansas is a common-law marriage state. Because of that, if you file bankruptcy (or taxes) jointly, you’re considered married in the eyes of the law. This, of course, has profound ramifications and should be discussed with your attorney.
THE MOST IMPORTANT PART
Marriage is an important life choice, as is bankruptcy. Neither one should be entered into without knowing the full financial, legal, and lifestyle consequences. Contact a qualified Kansas bankruptcy attorney for more information!
These articles are for general informational use and do not constitute legal advice. Since laws change over time, it’s possible some articles are out of date and for that reason, we make no representation that the articles are fully accurate. For actual, up-to-date legal advice (including a free consultation), please contact us!