i retired prior to the rewrite of the newest bankruptcy provisions, so accept this to be worth what you paid for it
it is my understanding that debtors who file for bankruptcy must now attend a credit counseling class prior to filing their bankruptcy petition. in addition to providing credit expertise, that forced delay stems some of the last minute bankruptcy filings which were prevalent before the revision of the bankruptcy rules
expect to pay for the class (a court approved private contractor will conduct it)
expect to pay for the filing of the bankruptcy petition
and expect to pay dearly for a good bankruptcy attorney
you have to have some money to go broke these days
you will be allowed a personal exemption for your equity in the home, household goods, jewelry, auto and tools of one's trade. the exemption varies, depending on what state your filing occurs. the state exemptions are usually better for the debtor than the standard federal exemptions. for instance, in my state, an individual can claim $35,000 home exemption, and if the spouse also files that would be another $35,000, to exempt that total $70,000 from the debt owed. but to maximize and properly determine the personal exemptions is one good reason to employ excellent counsel - experienced in bankruptcy law! - to guide you thru the process
if one has continuing income, they may have to file a chapter 13 bankruptcy instead of chapter 7. the difference is significant
under chapter 13 the debtor will be obligated to pay a set amount to the court each month, which amount is then disbursed to the creditors in whatever manner the bankruptcy judge has decreed. this payment plan is usually three to five years, and only after that period will your debts be discharged
in contrast, under chapter 7, it will be a matter of months
again, you should see why it is important to have competent counsel to coach you thru these matters
finally, should both spouses file? that may also depend on the state in which the bankruptcy is filed. in my own state, where there is ownership in property by the entireity, if one spouse has filed for bankruptcy, that alone prohbits any foreclosure action on the real property they jointly own. the creditor is "stayed" from pursuing any foreclosure action. you can see, one of the spouses gets to preserve their credit history intact if such a selection is made
there are community property states, Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington and Wisconsin, where other than real estate transactions, the credit incurred by one spouse automatically flows to the other spouse, even if they were without knowledge of the debt. in those states, eliminating a spouses participation in the bankruptcy may not yield a beneficial result
it's an arcane process, requiring sound counsel to make the best of it
i am not a practicing attorney and cannot provide legal advice
but given the scenario you provided, that the couple own a home unencumbered by debt, there may likely be much better ways to secure their home than thru bankruptcy
that debt incurred for medical reasons may soon be placed for collection, but if the couple transfer their property to their children and take a life estate interest in it, they could reside there until they die, without complications. if they would need to sell and move, that complicates things. a living family trust might be considered as a place to put at risk assets before a creditor could place a judgement against them and then proceed with the process of levy to collect against those assets. no two situations are alike. knowing so little prevents me from considering the variety of possibilities available to them
hiring a smart attorney is the wisest - and likely cheapest - course of action ... look for one with the reputation of a junk yard dog within the legal community