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Do I Have to Include a Spouse's Income When Filing for Bankruptcy?

Do I Have to Include a Spouse's Income When Filing for Bankruptcy?

Q: What disqualifies you from filing Chapter 7?

Several factors can disqualify you from filing for Chapter 7 bankruptcy. These include having a high income above the state median, failing the means test, or having filed for Chapter 7 in the last eight years. Certain types of debts, like recent tax obligations or child support, may also affect your eligibility.

Full question:

I am considering Chapter 7 Bankruptcy. I am married but filing alone. By business debt is $98,000 and non business debt $89,000. I understand I might not have to MEANS TEST because I have more business debt than consumer debt, but my wife & I have a combined income of $178,000 out of which mine is only $12,000 and right now I am unemployed.After all our expenses including the payment on my debt ($3400 a month) we do have some money left over each month.My question is in a Bankruptcy filing on my own do I have to list my wife's income and if so is there a chance the court put me into Chapter 13 rather than Chapter 7?

Category: Bankruptcy
Date: 04/07/2025
State: Illinois

Answer:

With the changes in the bankruptcy laws which became effective in October 2005, Congress stated specifically that unless the spouses are legally separated or living apart (and not just for the purpose of evading the bankruptcy laws) or have a valid prenuptial agreement, then the non-filing spouse’s income must be included in the means test analysis (which is one of the several eligibility tests now required). [11 U.S.C. 707(b)(7)(B)].

Based on the income level you described, it is possible the court would require you to file a Chapter 13 bankruptcy. If your monthly disposable income falls under $166.67, you can file for Chapter 7 bankruptcy. Otherwise, if you wish to file for bankruptcy, you must file for Chapter 13.

This content is for informational purposes only and is not legal advice. Legal statutes mentioned reflect the law at the time the content was written and may no longer be current. Always verify the latest version of the law before relying on it.

FAQs

Can you file Chapter 7 alone if married?

Yes, you can file for Chapter 7 bankruptcy alone even if you are married. However, if you are not legally separated, you must include your spouse's income in the means test. This could affect your eligibility for Chapter 7, as the combined income may push you towards Chapter 13 instead.

How to calculate means test for Chapter 7?

To calculate the means test for Chapter 7 bankruptcy, you compare your average monthly income to the median income for your household size in your state. If your income is below the median, you may qualify for Chapter 7. If it’s above, you’ll need to deduct certain allowable expenses to determine your disposable income. If your disposable income exceeds a specific threshold, you may be required to file for Chapter 13 instead.

What happens if you own a business and declare bankruptcy?

If you own a business and declare bankruptcy, the type of bankruptcy you file will affect your business. In Chapter 7, your business assets may be liquidated to pay debts. In Chapter 13, you can keep your business and create a repayment plan for your debts. It's important to consult with a bankruptcy attorney to understand the best option for your situation.

What happens if you own a business and file bankruptcy?

When you file for bankruptcy and own a business, the outcome depends on the bankruptcy chapter. In Chapter 7, the business may be closed, and assets sold to pay creditors. In Chapter 13, you can reorganize debts and keep the business operational while making payments over time. Legal advice is crucial to navigate these options effectively.