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The simplistic answer to the question of whether you have to file bankruptcy jointly when you are married is no.  You can choose to bankruptcy individually.  However, whether or not this is the best decision depends on a number of factors and often involves detailed legal and factual analysis tailored to the individual situation.
First off, my discussion of this topic is limited strictly to California bankruptcy filings.  California is a community property state with unique exemption laws.  My analysis would not necessarily be appropriate in states that have different property and exemption laws.
Whether you decide to file bankruptcy with your spouse or not will depend on a number of factors as follows:
1)      were the debts incurred jointly;
2)      does one of the spouses have separate vs. community property;
3)      are there issues because one spouse is ineligible for a bankruptcy discharge;
4)      is an objective of the bankruptcy junior lien avoidance on a jointly owned property;
5)      is it possible for one spouse to preserve a good credit rating;
6)      particularly with regard to Chapter 13 bankruptcy are the spouses amicable with one another;
7)      must one spouse maintain a security clearance;
8)      Will an exemption waiver create a problem;
9)      and what are the attributes and characteristics of each spouses obligations and liabilities
Let me start by saying that when you are married and you file for bankruptcy without your spouse your spouse will still be involved in the process to some extent.  If you are living with a non-filing spouse their income is still considered in the means test determination for the filing spouse.  For Chapter 7 the non-filing spouse’s income is generally combined with the filing spouse to arrive at current monthly income.  If the combined income exceeds the median income for your household size, and you and your spouse don’t have the right mix of necessary expenses, you may not qualify for Chapter 7 bankruptcy.  In a Chapter 13 bankruptcy your ability to repay is based on your household budget.  So even if only one spouse files for bankruptcy, the other spouse’s income and expenses are considered in determining the repayment obligation of the spouse who has filed for bankruptcy.  In addition the filing spouses exemption choices are limited if the non-filing spouse does not file an exemption wavier.  For the issues involving spousal waivers and how they may affect  a non-filing spouse see my blog post on this issue.
The benefit of having one spouse filing without the other may come from the fact that the non-filing spouse can preserve their credit (assuming that it is not already shot) and even make credit purchases for the household solely in their name that might not otherwise be possible.  In addition the non-filing spouse may in the future have their own individual need to file for bankruptcy and unavoidable future debts from an illness or loss of a job.  If they are not a party to the bankruptcy all of their separate bankruptcy options are kept open.
On the other hand if the debts are incurred jointly the creditors may go after the non-filing spouse for the balances that were discharged by the bankruptcy.  With that said, the creditors remedies may be limited to levy against the non-filing spouses separate property with the analysis of that issue being outside the scope of this discussion.  Even so, the debt collectors can continue to call to demand money from the non-filing spouse for the joint debt or his or her separate debts.  This in itself can be quite disconcerting for a couple looking for a fresh start.  I also will leave for a future discussion the situation where the spouses are living apart.  This creates a whole variety of unique issues and problems. Even with this situation, under the right conditions and careful consideration a joint bankruptcy might be possible and advisable.  I touch on some of these issues in my blog article about spousal waivers.
In the end careful legal analysis tailored to the facts and an individual couple’s needs and objectives is required.  You should discuss with qualified counsel your objectives and the respective consequences of filing jointly or not given your family’s specific circumstances.
For more information contact San Diego Attorney Raymond Schimmel
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Bankruptcy mills are high volume law practices that advertise aggressively and provide poor quality legal services.  Typical attributes of a bankruptcy mill are as follows:
a)  rely heavily on poorly supervised non-attorney staff; b) lack adequate controls over workflow (correspondence to 3rd parties & clients) and court deadlines; c)  cut corners both ethically and substantively; d) minimal attorney involvement; e) routinely fail to file necessary documents, and frequently show up to hearings unprepared, and f) Have usually been admonished by the court on more than one occasion.
Unfortunately, with bankruptcy filings soaring, many unaware consumers have turned to “bankruptcy mills” for help with their financial difficulties.  Most “bankruptcy mills” advertise heavily on television and radio while flooding homeowners in foreclosure with direct mail.  When a consumer chooses a “bankruptcy mill” they assume that they will be working closely with a lawyer on their case.  However, with bankruptcy mills, this is often not the case.  The economics are such that with a mill they have a very high ratio of cases to attorneys.  I have seen “bankruptcy mills” that literally have hundreds of open cases for each attorney working at the firm.
While the consumer might initially meet with an “attorney intake coordinator” who will sign them up, the intake coordinator rarely spends more than a few minutes with the client.  Rather their focus is to get a down payment with a signed retainer agreement. Once the retainer agreement has been signed the client is handed off to a “prep team.” The “prep” team usually consists of poorly supervised staff consisting of paralegals, law clerks and secretaries.
The “prep team” will gather necessary documents (usually with little or no attorney review) and prepare the bankruptcy petition and schedules to be filed in a cookie cutter fashion often omitting important disclosures and details.  The client will then be asked to come in and sign the often deficient papers.  Frequently the final signing is not supervised by an attorney.  This means that last minute questions or issues brought up by the client often go unaddressed.
The case is then filed and assigned to an attorney.  Often the attorney assigned to the case has never met the client. Frequently, In a Chapter 7 case the client goes to their 341 meeting of creditors only to find that they and their assigned attorney are playing “blind man’s bluff.”  In other words, the “bankruptcy mill” attorney will wander through the crowded hearing room trying to figure out which of the attendees are his or her clients.  Similarly, the “bankruptcy mill” clients will be looking for the attorney that they have never met while wondering whether they have been abandoned.  When the case is called, often the trustee is asking questions for which the assigned “mill” attorney is completely unfamiliar.  Many of these cases are continued for no other reason than the client was poorly prepped for the hearing or that  their assigned attorney is unprepared to answer obvious questions that should have been apparent if there had been continuity from the start of the case.  In other cases, clients lose their property or wind up charged with nondisclosure and felony bankruptcy fraud because of a break-down of communication with their attorney.   For an example of serious problems that arise from inadequate bankruptcy representation see my blog article “I Wish I had a Time Machine.”
As problems frequently arise with “bankruptcy mill” attorneys in Chapter 7, similar problems also arise in Chapter 13.  In a Chapter 13 case the problems and objections also often arise because of the lack of continuity in the way the case was prepared.  Inherently, without adequate communication between attorney and client the “bankruptcy mill” staff will have made many assumptions (often cookie cutter) rather than annoying a hopelessly over-burdened “mill” boss.  These assumptions along with an improper application of the law will often prompt a Chapter 13 trustee’s objection to confirmation of the client’s bankruptcy plan.  In some cases these problems can be fixed causing only inexcusable anxiety for the client and in other cases they cause the case to be dismissed with serious consequences for the client.
In conclusion it is important that you hire a firm where you can reasonably expect that you can get to know your attorney.  Your attorney should be reasonably available to answer your questions, review your documents and the preparation of your case, and to represent you at all trustee and court hearings. In many cases a consumer in need of personal bankruptcy case will get better representation with a well experienced attorney with a strong reputation and a manageable volume of cases.
 
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A new Chapter 13 controversy is brewing over whether a debtor can take an additional $200 “Old Car” operating allowance on the means test for paid-off vehicles that are more than six (6) model years old or that have more than 75,000 miles.  While the United States Trustee has generally conceded the issue, a number of Chapter 13 trustees have not.  In the Southern District of California where I practice, one of our Chapter 13 trustees has joined the new trend in trying to challenge the extra “Old Car” operating allowance.
Recently this issue has increased in significance since the Supreme Court had decided Ransom v. FIA Card Services.  In Ransom the Supreme Court of the United States (“SCOTUS”) held that a debtor may not take an ownership allowance on a paid-off vehicle.  Ransom v. FIA Card Services, 562 U. S. ____ (2011).    So if you are not able to take the “Old Car” allowance it’s a double whammy.  You cannot set aside an expense for replacement (“ownership allowance”) and you probably have a vehicle that is out of warranty and more costly in repairs and maintenance.
Prior to the Ransom decision there was a split of authority between the federal circuit courts as to whether a debtor could take an ownership allowance (currently $496) on a vehicle that had already been paid-off prior to their filing for bankruptcy.   The Fifth, Seventh, and Eighth Circuits said that you could take the allowance and the majority of the other circuits did not so permit.
In an effort to be fair to debtors with older model paid cars the Executive Office of the United States Trustee  (“EOUST”) has had a policy in place to allow  an additional “old car” operating allowance of $200.  This policy was not derived from the direct language of the bankruptcy law but in reference to Internal Revenue Collection Standards from which the “Means Test” expense standards were drawn.  In furtherance of the Internal Revenue Collection Standards, and to help guide field collection agents, the Internal Revenue Agency distributes an Internal Revenue Manual (“IRM”) to its field offices.  The IRM is not a legally binding document but is generally followed by the IRS and carries some persuasive authority with the courts. Similarly, the EOUST has a “Statement of the U.S. Trustee’s Position on Legal Issues Arising Under the Chapter 13 Disposable Income Test,” that is their guiding policy guidance to the Regional United States Trustees but is not legally binding
The IRM states as follows:
I.R.M. 5.8.5.20.3  (10-22-2010)
Transportation Expenses

1. Transportation expenses are considered necessary when they are used by taxpayers and their families to provide for their health and welfare and/or the production of income. Employees investigating OICs are expected to exercise appropriate judgment in determining whether claimed transportation expenses meet these standards. Expenses that appear excessive should be questioned and, in appropriate situations, disallowed.
2. The transportation standards consist of nationwide figures for loan or lease payments referred to as ownership costs and additional amounts for operating costs broken down by Census Region and Metropolitan Statistical Area. Operating costs include maintenance, repairs, insurance, fuel, registrations, licenses, inspections, parking and tolls.
3. Ownership Expenses – Expenses are allowed for purchase or lease of a vehicle. Taxpayers will be allowed the local standard or the amount actually paid, whichever is less, unless the taxpayer provides documentation to verify and substantiate that the higher expenses are necessary. Generally, auto loan or lease payments will not continue as allowed expenses after the terms of the loan/lease have been satisfied. However, depending on the age or condition of the vehicle, the complete disallowance of the ownership expense may result in a transportation expense allowance that does not adequately meet the necessary expenses of the taxpayer. See paragraph (5) below for the definition and allowances of an older vehicle.
4. Operating Expenses – Allow the full operating costs portion of the local transportation standard, or the amount actually claimed by the taxpayer, whichever is less, unless the taxpayer provides documentation to verify and substantiate that the higher expenses are necessary. Substantiation for this allowance is not required.
5. In situations where the taxpayer has a vehicle that is currently over six years old or has reported mileage of 75,000 miles or more, an additional monthly operating expense of $200 will generally be allowed per vehicle.

Example:
(1) The taxpayer who has a 1998 Chevrolet Cavalier with 50,000 miles, will be allowed the standard of $231 per month plus $200 per month operating expense (because of the age of the vehicle), for a total operating expense allowance of $431 per month.
Example:
(2) The taxpayer has a 1995 Ford Taurus, with 90,000 reported miles. The vehicle was bought used, and the auto loan will be fully paid in 30 months, at $300 per month. In this situation, the taxpayer will be allowed the ownership expense until the loan is fully paid; i.e., $300 plus the allowable operating expense of $231 per month, for a total transportation allowance of $531 per month. After the auto loan is “retired” in 30 months, the ownership expense is not applicable; however, at that point, the taxpayer will be allowed a $200 operating expense allowance, in addition to the standard $231, for a total operating expense allowance of $431 per month.

6. If a taxpayer claims higher amounts of operating costs because he commutes long distances to reach his place of employment, he may be allowed greater than the standard. The additional operating expense would generally meet the production of income test and therefore be allowed if the taxpayer provides substantiation.
7. If the amount claimed is more than the total allowed by any of the transportation standards, the taxpayer must provide documentation to verify and substantiate that those expenses are necessary. All deviations from the transportation standards must be verified, reasonable and documented in the case history.

 
In opposition to the IRM and the Statement of the U.S. Trustee’s Position on Legal Issues Arising Under the Chapter 13 Disposable Income Test guidance some Chapter 13 trustees’ are still arguing against the “Old Car” allowance.  The Chapter 13 trustees in large part are relying on three post Ransom cases.
In the first of these cases, In re Hargis,  the court denied the claim on the basis that this additional allowance is not in the standards table incorporated by 11 U.S.C. § 707(b)(2).  The court noted that an additional $200 vehicle operating expense deduction is neither in the Local Standards nor in the Collection Financial Standards.  The court therefore  concluded that “as a matter of statutory interpretation… the $200 additional operating expense is not an expense specified under the …Local Standards with the meaning of  § 707(b)(2)(A)(ii)(I).   In re Hargis, ___ B.R._____, 2011 WL 165123 (Bankr. D. Utah 2011).
In a similar case, Van Dyke, the court disallowed the additional operating expense deduction in part for the reason that the amount referred to in the guideline is not an applicable monthly expense amount specified under the Local Standards as required by the statute.  For that reason the court held that the allowance of this additional amount set forth in the guidelines would be inconsistent with the statute.  Making reference to the Supreme Court’s observation in Ransom about the role of the guidelines, the court concluded that “allowance of an additional amount as set forth in the IRS guidelines is not a matter of interpretation of the Local Standards for transportation, but one of its revision.”  Van Dyke, 2011 WL1833186.
In the final case,  In re Schultz, the court reasons that even if it were to utilize the guidance contained in the IRM, it would not necessarily produce the result that the Debtors would urge.  The court noted that the additional expense is generally, but not universally allowed.  Accordingly, it is discretionary.  Additionally the IRS applies Local Standards as caps on expenditures asserted by taxpayers, not as allowances.  Accordingly, the Debtors would only be entitled to the amount specified in the standard or their actual expenses, whichever is less.  The court went on to conclude since the amount was less on Schedule J for operating expenses than on Form B22C that the Debtors were only eligible for the lesser amount on Schedule J.  In re Schultz Case No. 11-40490-JWV-13, (W.D. of Missouri, June 2011).
In support of the IRM and the Statement of the U.S. Trustee’s Position on Legal Issues Arising Under the Chapter 13 Disposable Income Test guidance some debtors counsel have successfully argued in favor of the “Old Car” allowance in the following cases.
In the case of 10-61317_In_Re_Baker, the court supports its decision to allow the “old car” allowance based on the Justice Kagan’s response to Justice Scalia’s dissent in Ransom.  Justice Kagan for writing for the majority states, “Because the dissent appears to misunderstand our use of the Collection Financial Standards, and because it may be important for future cases to be clear on this point [emphasis and underlining added], we emphasize again that the statute does not “incorporate” or otherwise “import” the IRS guidance. Post, at 730, 732 (opinion of Scalia, J.). The dissent questions what possible basis except incorporation could justify our consulting the IRS’s view, post, at 732, n., but we think that basis obvious: The IRS creates the National and Local Standards referenced in the statute, revises them as it deems necessary, and uses them every day.  The agency might, therefore, have something insightful and persuasive (albeit not controlling) to say about them.”  In re Baker, Case No. 10-61317-13 (D. Montana, February 9, 2011).
Other cases that have found the IRM as persuasive in finding for special circumstances and allowance of the expense are as follows:  In re Slusher, 359 B.R. 290, 310 (Bankr. D. Nev. 2007), In re O’Conner, No. 08-60641-13, 2008 WL 4516374, at *13 (Bankr. D. Mont. September 30, 2008), In re Carlin, 348 B.R. 795, 798 (Bankr. D. Or., 2006), In re Wilson, 383 B.R. 729, 734 (8th Cir. Bap 2008).
In conclusion, the extra $200 “Old Car” allowance should not be considered a given in a Chapter 13 case. In reviewing the appropriateness of the expense courts are looking to see whether or not the extra expense is a special circumstance.  While the IRM may be have some persuasive value, debtor’s counsel should also be prepared to substantiate their estimation of why the allowance accurately reflects the anticipated additional operating expenses for an older high mileage car that in all likelihood is out of warranty.  Counsel should also know that where there is a discrepancy between the B22 allowance and the actual Schedule J expense many courts are disinclined to allow the extra expense.  If the expense is claimed on B22C,  the additional operating expense as expected should also be properly reflected on Schedule J.
For Bankruptcy Assistance in San Diego please contact Raymond Schimmel
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Sometimes it is worthwhile to put up a fight when you're being sued on a credit card or mortgage loan deficiency. The truth is, many times, the lender does not have the evidence available to prove the case, or does not have the means to get the proof admitted into evidence -- a crucial step to win a judgment for the debt against the borrower.

J.P. Morgan Chase & Co. tacitly admitted this recently when it voluntarily dismissed more than a thousand of its credit card lawsuits across the country. The company won't admit WHY it took this step which was reported in last week's Wall Street Journal.

It has been coming to light in the courts, however, that, just like the "robo-signers" that surfaced with the foreclosure mess, credit card lawsuit affidavits of the debt allegedly owed have been signed by employees who are not personally-familiar with the company records and have not verified the debt.

Rather than risk public disclosure and embarrassment, speculation is that the company decided to withdraw the cases until the documentation could be fixed.

For the poor soul facing a lawsuit, it is important to know that the collection "model" used by the credit card companies is based largely on the fact that very few debtors respond to the suit. In fact, about 94% of suits end up in "default judgments" because there is no response by the defendant.

To defend, you may have to have some knowledge of the law. This attorney frequently sees unrepresented debtors showing up in court and responding in this typical fashion to the judge's query as to whether they owe the debt: "I cannot afford to pay." By responding this way, the debtor has implicitly admitted the debt is owed, hence, the judge will issue judgment, and not being able to pay is not a valid legal defense to establishing the liability.

The debtor will have to, in good faith, contest the liability and ask for trial. Some understanding of the rules of evidence and "discovery" are helpful to know what proof the lender will have bring forward, how the debtor can ask for it, and what the lender's attorney will need to establish to get it admitted into the record.

It's not foolproof, but sometimes worthwhile, particularly when the debtor cannot simply declare bankruptcy, maybe because he has property which cannot be protected and which he would lose, or other personal reasons.

This law office specializing in financial matters in DC, VA and MD has successfully defended creditor lawsuits and settled others. One current case involves a suit for $185,000 for a second mortgage that was left over from a foreclosure on the client's home. Today, we got a letter from the lender who has brought his settlement offer down to $30,000 -- not a bad discount.

It doesn't hurt to investigate all the options. Don't be in the 94% who just let the lender get a judgment against them without a fight.