Posted by David Leibowitz on June 6th, 2009 in Uncategorized, Bankruptcy and married people
People often ask if they can file a bankruptcy case without their spouse joining in the petition. The answer is “Yes, you can file a bankruptcy without your spouse, and even without your spouse’s permission or knowledge.”
Of course there are a few catches.
The most important catch is the so-called “means test.” In 2005 when Congress amended the Bankruptcy Code, they decided that people who could afford to pay something to their creditors should be more or less forced to work for them for 5 years. To put it another way, if you make more than the median family income for a family your size, you are presumed to be abusing the bankruptcy system if you try to file a chapter 7 case and pay nothing to your creditors. Even if you have no assets for your creditors, if you are an above average earner, your earning capacity is deemed to be something to which your creditors are entitled.
Here’s the catch. Supposing you make maybe $35,000 a year. If you were single, you could easily file a bankruptcy case under chapter 7. You make less than the median income in most states. Suppose you were married to a postal worker who makes $60,000 a year and have no children. Even if your spouse doesn’t file, you are considered to have a household income of $95,000 a year, well above the median. Your spouse’s income is included for the means test even if you spouse is not filing along with you.
You are entitled to exclude from your non-filing spouse’s income whatever he or she demonstrably spends on himself or herself – this is called the “marital exclusion.” Your bankruptcy will not appear on your wife’s credit report. And your bankruptcy will not affect your non-filing husband’s credit.
The United States Trustee looks this type of case over carefully. You can see that it takes us longer and it is more complex to deal with a case where you file by yourself without your spouse. We almost always have to charge you more for such a case.
We can work this out with you in most cases. But it is time consuming and surprisingly complex.
Lakelaw can help you file a bankruptcy case even if your spouse is not included in the petition. Call us toll-free at 1-866-LAKELAW (525-3539) for help in metropolitan Chicago, Southeast Wisconsin, and in the Coulee- 7 Rivers Region around La Crosse.