For many couples both in Salem and throughout the rest of the U.S., financial struggles are among the top reasons for divorce. In some cases, those struggles may not only prompt a separation, but also bankruptcy. When divorcing couples are facing bankruptcy, the most common question that most ask is whether they should file before or after they are divorced.
One of the major components of a divorce is the division of property. It goes without saying that a bankruptcy can have a major influence in this area. Both federal and state laws allow one to claim exemptions on certain types of property when filing a Chapter 7 bankruptcy. New Hampshire allows its residents to choose between either its own exemptions, or the federal exemptions spelled out in Chapter 11 Section 522 of the U.S. Bankruptcy Code. These include:
- Aggregate interest in a home up to $15,000, a car up to $2,400, jewelry up to $1,000, business- or career-related tools up to $1,500, accrued interest or dividends in a life insurance policy up to $8,000, and up to $8,000 in the aggregate value of household furnishings.
- Professionally prescribed health-related items.
- Social security, veterans, disability, or unemployment benefits.
- Dividends on investment accounts.
- Money owed through any outstanding or pending legal judgments.
- Future assets to be dispersed through retirement funds.
New Hampshire actually allows married couples to double their exemptions. Thus, when it comes to divorce, it may be more advantageous to file before separating.
However, a couple must also qualify for a Chapter 7. Their median household income must come in at under the median state average, which according to the Department of Justice, is $91,750 for a family of four. If their income is above that, they may need to file individually, or consider a Chapter 13 bankruptcy.