If you maintain the same household with your spouse, they must be included on your bankruptcy petition. This means that, even you are filing for bankruptcy separately from your spouse and he or she has a good job and steady income, it could affect your case.
For a Chapter 7 bankruptcy your spouse’s income must be included on the means test, and for a Chapter 13 bankruptcy, it must be included on the Form 22C to determine your disposable income for the purpose of calculating your plan payments.
An issue could arise with your case because your spouse’s income could affect your eligibility to file a Chapter 7, or it could unreasonably inflate your Chapter 13 payments. If your spouse has their own bills or loans to pay, this could put a large strain on your budget.
Even so, you may be able to reduce the amount of income contribution through the marital adjustment deduction. This means that you can deduct any personal expenses that they pay with their own separate income such as student loans or personal credit card payments. You can also exclude the part of her income that is not used to support your household, such as retirement deductions, etc.
Below are some examples of items that might qualify as valid marital adjustment deductions you can use to adjust your non-filing spouse’s income for use in your bankruptcy case:
• payroll deduction such as taxes, insurance, retirement contributions, and union dues
• 401(k) loan repayments
• payments on credit cards that are only in the name of your non-filing spouse
• cell phone expenses for your non-filing spouse’s phone
• car payments, insurance, and car expenses for your non-filing spouse’s car
• student loan payments for your non-filing spouse
• child support for your non-filing spouse’s children who do not live with you
• alimony payments
• business travel, food expenses, and uniforms
• attorney’s fees
• entertainment expenses and gym memberships, and
• mortgage payments and other expenses for real estate owned solely by your non-filing spouse.
Many of these could not be deducted in the regular part of the means test if the couple filed a joint bankruptcy petition. Also, keep in mind that, when filing these deductions, you will need to support them by providing evidence in the form of documentation and paperwork. Additionally, ensure that you are not claiming the same deductions twice – an expense should appear in either Part IV or Part V, but not both.
