Chapter 13 Bankruptcy / Chapter 7 Bankruptcy

Does Income of Both Spouses Need to Be Reported in Bankruptcy if Only One Spouse is Filing?

When you file bankruptcy protection you are required to report household income to determine eligibility of the chapter you wish to file.  The same is true for married couples who file a joint bankruptcy or a married person filing an individual petition.  In other words, you are required to report income of your spouse even though you are filing for protection as an individual. Whether your spouse’s income is an issue depends on the circumstances surrounding your filing.

When you file Chapter 7 or Chapter 13 bankruptcy you are required to disclose monthly income for your household.  If you and your spouse share the same household you would report income you earn and the amount your spouse earns.  Income of both spouses is needed for the means test which reviews eligibility of the individual spouse seeking protection.

A Chapter 13 bankruptcy filing may consider the income of the non-filing spouse when reviewing disposable income.  Disposable income is the amount of money you have left each month after paying necessary expenses.  This information helps determine monthly payments for the repayment plan.  In some cases, the income of the non-filing spouse could affect eligibility of Chapter 7, unless their income contributes more to household and living expenses.

A married person filing for protection on their own without their spouse may qualify for a marital adjustment deduction.  Depending on how much income your spouse contributes to the household or if they have their own expenses they cover (credit card debt, student loan debt, or other obligations in their name), they may qualify for the deduction.

Reference: http://www.nolo.com/legal-encyclopedia/do-i-need-include-spouses-income-bankruptcy-petition-although-i-m-filing-without.html