It is not always necessary for both spouses to file bankruptcy, but a bankruptcy where one spouse files and the other doesn’t can be complicated. Here are a few things to know and consider:
The non-filing spouse’s income must be included in the Means Test, Form 22A or 22C to determine bankruptcy eligibility. This is true even if a divorce is pending and the couple is living apart.
In the Means Test, you must calculate the current monthly income by averaging the gross income for the six months prior to filing bankruptcy. This includes the non-filing spouse’s gross income. The bankruptcy court then adjusts for the non-filing spouse’s expenses by determining what is called the “Marital Offset.” For example, the non-filing spouse’s car payment, credit cards, taxes, and other expenses that do not contribute to the household, or are for the non-filing spouses benefit only, are removed from the calculations using the Marital Offset. The non-filing spouse can also deduct expenses that a debtor (the spouse filing bankruptcy) cannot deduct such as student loan payments and retirement contributions.
During Chapter 7, payments continue for student loans. In Chapter 13, student loan payments are deferred while the bankruptcy is pending, and those payments are not calculated into the expenses when determining disposable Income.
The debtor is usually trying to discharge as much debt as possible. But, be aware that the Bankruptcy Trustee can object to the marital deductions, so you should limit the expenses included in your filing to those that are actual and reasonable for inclusion. That is why it is important to consult an attorney in these situations. An experienced bankruptcy attorney can make sure that all of the non-filing spouse’s expenses are accounted for and excluded from the household expenses.