Bankruptcy

Divorced Couple Still Lives Together: Does Either Spouse Have To Count Ex-Spouse's Income In Bankruptcy Means Test?

By Jonathan Alper

Husband and wife were just divorced, but until they can afford two households they remain living in the same house. They agreed that they would separate their finances. Each spouse pays their own expenses from their own income; they each pay ½ of the mortgage and other property expenses. The wife wants to file bankruptcy before she finds her own residence. She asked me if her bankruptcy analysis needs in include her ex-husband?s income if they are already financially separated and legally divorced.

I understand the rule is that a debtor?s means test includes all income in the household regardless of the relationship of those living in the house, and that therefore, the wife?s household income would include her ex-husband?s earnings. This might appear unfair if the ex-husband?s income is substantially higher than the wife?s earnings and they will be living separately in the future. The wife may deduct from her means test whatever the ex-husband pays toward household expenses. If the ex-husband pays expenses proportionate to his income then the means test result should be reasonably fair for the wife. If the couples respective incomes and actual expense responsibility cause the wife to fail the means test she should wait until she relocates in to her own household before she files bankruptcy.

Full post as published by Florida Bankruptcy Law on May 20, 2010 (boomark / email).