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What Happens if I Get Married During My Bankruptcy Case?

Getting married can be one of the greatest blessings in life. However, it can sometimes create a negative effect on getting relief in a Chapter 7 or Chapter 13 bankruptcy case.  Getting married during the middle of a bankruptcy case can potentially alter what is required to achieve debt relief in bankruptcy. 

Getting Married During the Middle of Chapter 7 Bankruptcy

If you get married after your Chapter 7 bankruptcy case is filed but before you receive the discharge, there is usually no changes in requirements for your case. Although Chapter 7 bankruptcy does look at the total household to determine available income, Chapter 7 debt relief is usually unaffected by a brand new marriage because it your case is completed in a very short period of time. The total case only usually takes 4 to 5 months from the date of filing to the date of discharge.  Therefore, a new marriage in this short time period may not be taken greatly into consideration.   

Getting married in the middle of your Chapter 7 case usually will not affect the outcome. In chapter 7, the court usually considers all past debts to be dischargable in the case.  Chapter 7 looks more into the past than the future in most aspects.  There is not a substantial look forward into the financial capacity of the debtor’s household like in Chapter 13.   Although the Courts could hold you responsible to pay part of your debts through your new spouse’s future income contributions, this is not how it usually plays out during the fresh-start type system of Chapter 7.

Getting Married During the Middle of a Chapter 13 Case

Getting married during the middle of a chapter 13 case can have a greater impact on what repayment requirements you must follow during your Chapter 13 plan. Although the court may vary on how it treats a new marriage situation from case to case, generally the rule is that your total household income and expenses determine how much of your debts you must repay during your Chapter 13. Therefore, it is possible in some situations that you will be required to pay a higher payment if you get married during your Chapter 13 case.

However, the court may take into consideration the totality of the circumstances when determining whether a new spouse should contribute towards the repaying of debts. In cases where the new marriage occurs close to the beginning of the case, there is a higher likelihood that the new spouse’s income will be required to contribute towards Chapter 13 plan payments.  In cases where the marriage occurs near the end of the Chapter 13 case, there may be an argument against the new spouse being required to contribute towards any repayment of debts.  This argument may also be strengthened if the new spouse has no connection to the former spouse’s debts.  Other factors to consider may include if the new relationship commenced after the confirmation (acceptance by the court) of the Chapter 13 plan.

Completing Bankruptcy Relief Before a New Marriage Begins

Completing your your bankruptcy relief before a new marriage is usually a good idea. Remember, bringing two income earners together can drastically change the combined total household income. In many cases, individuals are eligible for Chapter 7, but as a new couple they are not eligible.  These couples could get forced into filing an unwanted Chapter 13 if bankruptcy relief is desperately needed.  Therefore, if you considering bankruptcy relief, it may be wise to complete the bankruptcy process before entering a new marriage situation.

Internet Bankruptcy Advice?

Bankruptcy Internet Advice

With the Internet being so readily available, many turn to the Internet for bankruptcy advice. Be careful.  Bankruptcy advice can only truly be given by a bankruptcy attorney.  Remember, legal advice is specifically tailored for each situation.  Seeking Internet bankruptcy advice can lead to undesirable outcomes.  However, there are advantages to using the internet to research bankruptcy.

Internet Bankruptcy Advice?  Stick to General Information Only

Using the Internet to educate yourself about the bankruptcy system can be extremely helpful. The Internet is full of general information on bankruptcy.  You can familiarize yourself with the various chapters of bankruptcy and their purposes. You can also sometimes find general help as to what is preferable in a bankruptcy situation and also what to avoid.

However, only general information should be acquired. The various bankruptcy resources online are designed for general information purposes only. No bankruptcy website is going to claim that it is delivering legal advice.  These sites are clearly not for that purpose.  Such advice would be impossible because legal advice must be specifically tailored to each set of facts. 

Never Seek Internet Bankruptcy “Advice” to Make Your Action Plan

Acquiring general information to create a specific action plan on bankruptcy is a mistake.  The problem is that you will not be as qualified or knowledgeable as a bankruptcy attorney. Remember, a free consultation is FREE.  Although you may have acquired a considerable amount of knowledge in bankruptcy, it is very likely that important gaps may still remain.  These “gaps” in knowledge can cause very undesirable situations to develop during your bankruptcy planning or filing process.

Internet Bankruptcy Education is Better than “Advice”

The internet can be a tremendous tool for researching bankruptcy.  Although you should never seek advice on a specific situation, understanding bankruptcy and other areas of law can be life-changing. When you understand various areas of law, you can confidently pursue your business and personal goals.   Using the internet to educate yourself on bankruptcy can be an important part of your overall financial education.  Financial education is extremely valuable wherever you can find it, including sources on the internet.  Developing a thorough knowledge of bankruptcy from books or the internet is very beneficial.  It adds to your background of financial knowledge. 

File Your Tax Returns Before Filing Bankruptcy

It is a good idea to file your taxes before filing for bankruptcy.

Before you consider filing bankruptcy, it may be a good idea to get your tax returns up-to-date. If you have not filed required income tax returns, you will likely be required to file them during your bankruptcy. However, there are advantages to getting your tax refunds filed as early as possible before considering bankruptcy.

Tax returns must be up-to-date when you file for bankruptcy

In order to file a bankruptcy case, you will be required to bring all your federal and state income tax filings up-to-date.  If you have a missing tax return within the last four years, it is very likely that the bankruptcy system will require you to file it during the process.   Therefore, all tax returns should be filed BEFORE you file for Chapter 7 or Chapter 13 bankruptcy if at all possible.

It is a very bad idea to wait to file your tax returns after you file for bankruptcy.   This is because you only have a short time to complete your tax returns during the active bankruptcy process. In addition, you will likely lose any tax refunds owed to you from those recently filed returns.  

Getting your taxes filed may help you discharge income tax debt

If you have income tax debt that is more than three calendar years old, you can possibly discharge this debt in bankruptcy.  However, income tax debt cannot be discharged usually unless you have personally filed your returns.   It may not count if the IRS just assesses the tax against you or files your returns for you.   

Therefore, it is critical to have all your tax returns up-to-date if you are considering discharging tax debt in bankruptcy. Remember, you also have to wait for two years to pass after you file the return.  Income tax debt cannot be discharged until two years has passed from the filing of the return also in most cases.

Before you consider filing bankruptcy to eliminate tax debt, you should talk to an accountant and a bankruptcy lawyer.   Getting behind in tax payments can grow into a situation that can be very stressful. Do not live with this stress: make an action plan with an accountant and a bankruptcy attorney to get out of your tax debt.   The rules and requirements for discharging tax debts are too complicated to tackle on your own.  Call our office for a free consultation.

Reinstating a Driver’s License Through Bankruptcy

A drivers license can be reinstated by filing for bankruptcy in Indiana (and most other states) in certain situations. If your license has been revoked in Indiana for “financial responsibility” requirements, you may be able to have your license reinstated by filing for bankruptcy.   The bankruptcy filing will take away your “financial responsibility” for the auto-accident, allowing you to reinstate your driver’s license. 

Bankruptcy can Reinstate Your License After an Uninsured Accident

If your license was revoked because you did not have insurance during an accident, then you may be able to reinstate your license by filing for bankruptcy in Indiana.  Indiana requires all drivers to have a certain minimum coverage insurance protecting other parties in the event of an accident.  If you did not have insurance during the time of your accident, then you will be “financially responsible” for the accident’s losses.  If you do not pay for these accident losses within a reasonable time, the State of Indiana will revoke your driver’s license.

When you file for Chapter 7 bankruptcy in Indiana, this “financial responsibility” requirement is dropped.  Because you are no longer legally responsible for the debt due to a bankruptcy filing, your license can be reinstated.  To have your license reinstated, you are required to show the BMV proof that you have filed bankruptcy.   You must also show the BMV that you have included your “financial responsibility” creditors in your schedule of debts.  The BMV in Indiana can be reached online and through the BMV reinstatement phone number.  

Bankruptcy cannot reinstate your license in every situation

Bankruptcy cannot always reinstate your driver’s license.  Reinstatement depends on the situation. In situations where your license was revoked for criminal matters or excessive tickets, it is unlikely that bankruptcy will have any effect on the situation.   In such situations, you may need to arrange a hearing to determine the requirements for the reinstatement of your license.  In addition, you may be able to seek special driving privileges under a state court petition.   The advice and help of a lawyer who focuses on license reinstatement may be the best first step toward getting your license back.  

If you have lost your license due to a lack of insurance or other unfortunate situations, it is important to do everything you can to “get legal” again.  Driving illegally can quickly create a much larger mass of tickets and criminal infractions that can make it very difficult to ever get your license back in the future.  If you are driving illegally, you need to think twice.  You are breaking the law.  Contact an attorney, the proper administrative channels, or an insurance agent to do whatever needs to be done to make sure you are “legal” before you get behind the wheel again.