With debt piling up and expenses becoming unaffordable, more and more people are contemplating bankruptcy. While this is a common financial move, it's not one to be taken lightly. Deciding whether or not to file is a hard decision, especially if you are considering marriage at the same time. So the question is, should you declare bankruptcy before or after tying the knot?

Filing Before Marriage

In many cases, filing for bankruptcy before marriage is the best option. If you have significant debts and don't want this to legally fall on your partner, filing before marriage can prevent this. Getting rid of your debt will allow you to have a fresh start during this new chapter in your life.

This is also good timing if you are worried about your credit score. Your spouse's score will not be affected if you file while single. If your score is already bad, filing may actually strengthen it, which can help with financial decisions post-marriage.

That being said, filing individually can make it harder to protect some of your assets from being liquidated. It is also a challenging process to go through alone.

Filing After Marriage

There are some instances when it would be better to file after marriage. If you choose to file at this time, you will have the choice to file jointly with your spouse. Doing so may save you money on filing fees and legal expenses. You will also save time as fewer individual meetings with creditors and trustees will occur.

Bankruptcy exemptions may also increase in this instance. Many married couples are allowed to keep their homes and cars at a higher rate than individual filers.

The biggest downside of filing after marriage is that both people will be hit with the financial burden of bankruptcy.

Things To Consider

There are many factors that should be taken into consideration when deciding if you should file for bankruptcy before or after marriage. Understanding all the implications of your decision will help set you and your family on the right path.

State Laws

Depending on the state you live in, there are different laws in place that impact you and your spouse's financial obligations.

If you live in a community property state, all assets that you own before the marriage and anything bought separately during the marriage are yours. Anything bought together with your spouse during the marriage is jointly owned.

This means any debt that you accrued before marriage is your problem, and after marriage, any debt that is accrued is everyone’s responsibility. In most states, everything is split evenly between spouses, but there are some cases where the spouse that makes a higher income may be entitled to more assets.

If you live in a common law state, each person is a separate legal entity throughout the entire marriage. There are very few cases where debt will fall equally on both parties. This includes:

• Debt that benefits the marriage (from food, shelter, or childcare)
• Debt that was jointly assumed
• Debt that is connected to both spouses' credit cards

Mortgages And Loans

If you are planning on buying a home, starting a new business, or sending a child to college in the near future, mortgages and loans should be on your mind.

In some cases, it might be smart to try to get a loan or mortgage before filing for bankruptcy with your spouse. But if you do choose to file for bankruptcy before getting married and taking out mortgages, then it won't be the end of the world. Although the process may be longer and more complicated, you are still eligible for loans after bankruptcy.

In some cases, banks and lenders may use the lower of the two credit scores if you and your spouse apply for a loan. So it is important to think about the effect filing will have on your financial documents.

Marriage Problems

The most common cause of conflict between married couples in money. Financial strains, including bankruptcy, can cause stress and anxiety, taking a toll on your relationship. It is essential to have an open conversation and discuss the changes that bankruptcy will bring. Filing is a big decision, and it is vital to ensure you and your partner are on board and ready for whatever challenges come your way.

Conclusion

Filing for bankruptcy and getting married are big decisions. Understanding when the right time to do both is crucial to making the most out of your relationship and financial life. With the correct information and assistance, you and your partner can be on the path to a successful financial future.