What’s the Difference Between Chapter 7 and Chapter 13 for Married Couples?

Money problems rarely affect just one person in a marriage. When bills pile up and creditors keep calling, both spouses feel the strain. If you and your spouse are considering bankruptcy, you’re likely wondering which chapter fits your family and whether to file together at all. The answers depend on your income, your property, and how your debts are titled, and the wrong choice can follow you for years. At Biggs Law Firm, our consumer bankruptcy attorneys help married couples in Raleigh, New Bern, and across Eastern North Carolina work through these decisions together. Here’s an overview of what to expect.

Can Married Couples File for Bankruptcy Together in North Carolina?

Yes. Federal bankruptcy law allows spouses to file a single joint case, which means one petition, one filing fee, and one set of proceedings. Joint filing often makes sense when most of your debts are shared, such as a mortgage, car loans, or credit cards you both signed for.

Filing together is not always the right move, though. Sometimes it makes more sense for only one spouse to file, depending on whose name the debts are in and what each spouse owns. Choosing between joint and individual filing is one of the first decisions we work through with couples, because getting it wrong can leave one spouse exposed to creditors.

What Is the Difference Between Chapter 7 and Chapter 13 Bankruptcy?

Chapter 7 and Chapter 13 take very different approaches to debt relief, and each one looks a little different for a married couple than for a single filer.

How Does Chapter 7 Bankruptcy Work for Married Couples?

Chapter 7 bankruptcy is often called “liquidation” bankruptcy. A trustee reviews your assets and may sell property that isn’t protected by exemptions, and most qualifying unsecured debts, like credit cards and medical bills, are then discharged. Cases typically wrap up in a matter of months. The catch is that what you keep depends on exemption and eligibility rules that are easy to misjudge, and a mistake can cost you property you expected to protect. Our attorneys review your assets before filing so there are no surprises.

How Does Chapter 13 Bankruptcy Work for Married Couples?

Chapter 13 bankruptcy lets you keep your property while repaying some or all of your debts through a court-approved plan lasting three to five years. Couples often choose it when they’re behind on a mortgage or car payment, have property they’d lose in Chapter 7, or earn too much to qualify for Chapter 7. A plan built on unrealistic numbers can fail partway through, so our team designs each plan around what your household can actually sustain.

How Does My Spouse’s Income Affect Bankruptcy Eligibility?

This is where many couples get surprised. Even if only one spouse files, the court generally looks at your combined household income and expenses when applying the means test. A non-filing spouse’s paycheck can push a household over the Chapter 7 limit, although certain adjustments may apply for income that doesn’t go toward household expenses.

Household income also affects the payment amount in a Chapter 13 plan. Calculating these figures correctly is technical work, and mistakes can lead to a dismissed case or questions from the Bankruptcy Administrator, who oversees bankruptcy cases in North Carolina. Our attorneys document your household finances carefully and present them properly from the start.

What Happens to Joint Debts and Shared Property When Married Couples File?

Joint debts deserve close attention. If only one spouse files Chapter 7, that spouse may receive a discharge, but creditors can still pursue the non-filing spouse for any debt they share. Chapter 13 offers a potential advantage here, because it can provide temporary protection for a co-signing spouse on certain consumer debts while the plan is in effect.

Property raises its own questions. North Carolina recognizes a special form of ownership for married couples called tenancy by the entirety, which can shield certain jointly owned property from creditors of only one spouse. Joint filers may also be able to claim exemptions for each spouse. Whether any of these protections apply depends on how your property is titled, which debts are shared, and which chapter you choose, and these are details our attorneys review closely before recommending a path. Certain types of debts, such as income taxes owed to the IRS raise additional questions about property ownership that can affect your case. 

Should One Spouse File or Should Married Couples File Jointly?

There is no one-size-fits-all answer. When we meet with a couple, we look at whose name is on each debt, how the home and other property are titled, whether your combined income fits Chapter 7 or supports a Chapter 13 plan, and what you want to protect long term. Each of these factors affects the others, which is why a decision that looks simple on paper often turns out differently after a full review.

If separation or divorce is a possibility, timing matters too. Bankruptcy and family law issues often overlap, and the order in which you address them can affect both outcomes.

How Can Biggs Law Firm Help Married Couples Choose Between Chapter 7 and Chapter 13?

Choosing a bankruptcy chapter as a married couple means weighing joint versus individual filing, household income, property ownership, and shared debts, then building a strategy that protects both of you. A misstep in any of these areas can cost you property, leave a spouse liable for debts, or put your case at risk.

At Biggs Law Firm, we take a hands-on approach to every case. Founding attorney Laurie Biggs is board certified in business and consumer bankruptcy law, and attorney Jody Bledsoe previously served as the Chapter 13 Trustee for the Eastern District of North Carolina, giving our team insight into how these cases work from every angle. We’ll take the time to understand your family’s situation and explain your options in plain language.

If you and your spouse are struggling with debt, you don’t have to sort it out alone. Schedule a consultation with our Raleigh or New Bern team, or call (919) 375-8040 to take the first step toward financial stability together.