Do I need to include my spouse's income on my bankruptcy petition although I'm filing without her?

Question

I am filing for bankruptcy without my spouse. She has a good job. Do I have to include her income on my bankruptcy petition?

Answer

If the two of you share the same household, then yes. If you maintain separate households, then no.

In both a Chapter 7 and Chapter 13 bankruptcy, you are required to include your spouse's income in your bankruptcy petition. For a Chapter 7, her income must be included when doing the means test. In a Chapter 13, her income must be included on the Form 22C to determine your disposable income for the purpose of calculating your plan payments.

The potential problem with including her income is that it may make you ineligible for a Chapter 7, or may unreasonably inflate your Chapter 13 plan payments, which could really strain your budget if she has her own bills and expenses to pay.

However, you may be able to reduce the amount of her income contribution through the marital adjustment deduction. This means that you can deduct any personal expenses that she pays with her own separate income and exclude that part of her income that is not used to support your household. Some examples of a marital deduction expense includes payments for her own student loans and credit cards, or deductions from her paychecks for her own retirement plans.

For more information on how this works, read The Marital Adjustment Deduction on the Means Test.