To protect their property and families, thousands of people file bankruptcy in Minnesota every year. Moneylenders want people to feel ashamed when they file bankruptcy, to discourage such actions. But most people file bankruptcy because of medical debt, divorce, unemployment, or some other situation which was totally beyond their control.
Nevertheless, there are still many impediments to filing bankruptcy in Minnesota. Some people worry about how a voluntary petition will affect their jobs. Others worry about how bankruptcy may affect their spouses, and that’s the subject of this post.
Some Bankruptcy Discrimination Issues
It is legal to consider a person’s credit history when making certain decisions, such as hiring and firing. However, federal law makes it illegal to discriminate based on a bankruptcy filing. This law places bankruptcy alongside race, gender, national origin, and other protected classes. So, from a purely legal standpoint, a personal bankruptcy filing does not affect your husband or anyone else in the family.
Informal discrimination, which some people call the bankruptcy prejudice, is another matter. As mentioned, moneylenders spread the untruth that only reckless spendthrifts file bankruptcy. Unfortunately, many people believe this myth. So, after you file bankruptcy, it’s important to be upfront about the reasons you took this step.
Honesty in all forms goes a long way toward defeating discrimination in all its forms.
Single Filer vs. Joint Filer
In almost all consumer bankruptcies, the debtor is entirely in control of the proceedings. Involuntary bankruptcies can be filed by a debtor’s creditors, but only in Chapter 7 bankruptcies, and they are extremely rare. That control includes your filing status. So, you have a choice as to whether bankruptcy affects your husband.
There are some advantages to filing individually. As mentioned, such an action means that your partner will not have to review paperwork, attend a creditors meeting, or do anything else related to the case.
There are also advantages to filing jointly. In Minnesota, some property exemptions double for joint filers. The federal homestead exemption is one example. Single filers may exempt $23,675 of their share in homestead equity; joint filers may exempt $47,350. Because of the doubling of exemptions, joint filing may be the best way to protect equity.
Things get a little complicated in terms of the automatic stay. Technically, Section 362 of the Bankruptcy Code only protects the filing party, but a nonfiling party can still benefit. Assume Debbie and David Debtor are joint owners of a home that’s in pre-foreclosure. If Debbie files individually, the bank cannot foreclose on the loan. However, the bank can attempt to collect the amount due from David individually. In many cases, moneylenders in this position are extremely aggressive.
This issue does not come up very much in our office, especially since Kain & Scott offers free credit repair. We don’t just help people file bankruptcy. We help people recover from bankruptcy, so they do not have to file again later.
That being said, multiple filings sometime happen. In this context, lightning does sometimes strike twice in the same place.
Let’s go back to Debbie and David. If Debbie files bankruptcy individually, her filing technically does not keep David from filing individually later and taking full advantage of the automatic stay. However, many trustees see these kinds of actions as abusive. They may act in what they believe to be the best interests of the creditors and ask the judge to set aside the stay.
The rule regarding multiple filings is that the automatic stay is only limited for a one-time repeat filer and there is no stay at all for a two-time repeat filer. The debtor can extend the stay by filing a motion and obtaining a court order. As a practical matter, most Minnesota judges extend the stay for one-time repeat filers without even requiring a hearing. But the process is not as easy for two-time repeat filers. Courts usually scrutinize these motions fairly closely.
Bankruptcy debtors have almost complete control over whether their filings will affect other family members. For a free consultation with an experienced bankruptcy attorney in Minnesota, contact Kain & Scott. Convenient payment plans are available.