Bankruptcy may occur when a person or business is unable to make good on their debt. The term is often used generally, and even metaphorically, but there’s also a legal definition of bankruptcy. People in Florida should know that legally speaking, bankruptcy is a process that debtors petition for. It’s not a punitive measure enforced from the outside; it’s a way of getting help.
Bankruptcy is a status that people can file for individually, which is true even for married people. While some married couples file for bankruptcy jointly, others file separately so that the other spouse can protect their property. This strategy can be affected by residency, however. In community property states, if the couple acquires an asset during the marriage, it belongs to both of them. In fact, property becomes a separate body called “the community.” Exceptions to this community property structure include property that’s inherited by an individual spouse during the marriage.
Florida follows a different structure as an equitable distribution state. In Florida, there are several different determining factors for who owns which property. Even though there’s no so-called “community,” the way purchases are used is considered. Shared expenses like rent or mortgages, school tuition and food expenses are considered to be shared.
In every state, the assets of the non-filing spouse must be reported to the court. Debt collectors may be permitted to contact the non-filing spouse, too. Bankruptcy may be a great tool for families who are facing harsh circumstances like foreclosure. It helps people regroup and start over again. Those facing bankruptcy might want to seek the advice of an experienced attorney. A lawyer may help determine whether Chapter 7 or Chapter 13 is a better fit and whether joint or individual filing is more prudent.