Married people do not have to file a case together. There are times when only one of the spouses might need or want to file a case and that is absolutely ok. The non-filing spouse does not have to make the bankruptcy payments in Chapter 13 bankruptcy for the person that files. This does not mean the non-filing spouse can use the bankruptcy as a shield against a debt they are cosigned on (with some exceptions) or that it will protect them if the joint creditors come after them – it just means they do not have to contribute money to the case directly.
You still have to disclose your non-filing spouse’s income. The court will look at the non-filing spouse’s income to determine if your Chapter 13 case will have to run for a minimum of 36 months or 60 months. The income from your spouse may move you into a longer case, but a competent attorney will question how much income your spouse contributes to the household. Your spouse’s contribution to the household is very important. Your attorney should go over the budget with you in detail and should ask you questions about your spouse’s income and expenses. Your spouse’s contribution might not only influence how long you have to stay in the case but also how much money you pay to the trustee every month.
Chapter 13 Bankruptcy While Married Example
Here is an example. I make $60,000 a year. If I file a bankruptcy and my non-filing spouse contributes nothing to the household expenses and I cover everything then my payments in the bankruptcy are just based on my income. For the moment we will assume he or she is not working. Let’s imagine I have $60,000 in credit card debt and I am proposing a 36 month bankruptcy plan (below the median) where I am paying $200 a month to cover my creditors based on my income minus my expenses. In this example my payments are just based on my income and the household expenses. I am covering the rent or mortgage, utilities, food, insurance and all other general costs of living.
Now let’s imagine my spouse is working and is bringing home $2,000 after taxes every month. They contribute $600 to the household bills (the ones I was covering above) and then they make their car payment ($500) and student loan payment ($200) and contribute to retirement ($200) and finally they put some in savings ($300) and give some money to an elderly parent ($200).
The first $600 from my non-filing spouse would increase the household income that was covering the basic household expenses. If we were using the example above I would now have a $800 available for my bankruptcy payment.
You may have noticed that in the examples I am paying in $7,200 ($200 over 36 months) and $28,000 ($800 over 36 months). In neither case am I paying the creditors in full. These numbers differ from case to case but often we are not paying creditors in full but we are still satisfying the bankruptcy requirements.
Remember, your spouse does not have to pay your creditors in your chapter 13 bankruptcy case, but the income they contribute to the household may impact your ability to make payments to your creditors. Your attorney should cover this in depth with you.
If you have any questions about filing a bankruptcy petition please feel free to call or contact one of our bankruptcy attorneys. We cover the entire state of Kansas and Western District of Missouri. We would be happy to give you a free bankruptcy consultation.