One of the difficult things in filing for individual bankruptcy is how to handle a situation where the debtor is married, but the application is individual not joint, namely the spouse does not participate in the bankruptcy filing. The most important thing in this scenario is how to correctly calculate the debtor’s income and expenses on the calculation form B22A (‘Test Average’). In general, there are 3 possible scenarios when a potential complainant gets married:
‘Married, filed together’: This is the most common, and conceptually the easiest to deal with. As both spouses participate in the bankruptcy, they are considered as one economic unit, and thus both incomes will be entered in schedule form B22A (‘Test Average’). Similarly their combined expenses should be reflected on Schedule J (statement) Current Expenses (i.e. a detailed list of monthly living expenses such as food, clothing, housing, utilities, taxes, transportation, medicine, etc.).
‘Married, not filed together, without separate household declarations’: This situation is a little less common, and therefore a little more complicated. The debtor files without the participation of his spouse, who remains with the debtor. Therefore, the gross income of the husband and wife who do not fill in must be included with the debtor’s income for the purpose of calculating the ability test (Similarly, the expenses of a husband and wife who do not submit must be included in the J List of debtors, thus enabling a fairer assessment of the financial position of the debtor’s household) . This means that the debtor can violate the ability test even though his income is far below the income limit of the applicable facility test, if the income of the husband/wife who does not apply, when added to the debtor’s income, results in a total of more than the applicable limit. Equally frustrating for a potential debtor is when the income may not be enough to cover the debt on his behalf but, when the non-filed spouse’s income is taken into account, the combined income is sufficient to cover the combined household. expenditure. This situation will trigger a 707(b) trustee’s objection that the combined gross income exceeds the applicable facility test threshold.
‘Married, not filed together, with separate household declarations’: By checking this box, the debtor is literally declaring, under perjury, that “My spouse and I are legally separated under applicable non-bankruptcy laws or my spouse and I are living separately other than for the purpose of circumventing the requirements of 707(b)(2)(A) of the Bankruptcy Code.” This means that the debtor must be prepared to testify under oath, as well as to document the fact if requested, that the non-filling spouse’s income is really not available to contribute to the debtor’s expenses, and that the debtor is not just pretending. separated to exclude spouse income from the ability test calculation. The debtor’s application may not include the income of the spouse who does not file (husband, children, or other payment of benefits, if received by the debtor from the spouse who does not file, recorded by the debtor as a separate income item) or expenses, which based on the debtor’s statement are considered valid for the house. completely separate stairs.
Of course, be sure to seek advice from an experienced bankruptcy attorney before you decide on any course of action for this or any other bankruptcy matter.
