It is perfectly feasible for a married individual to file Chapter 7 or Chapter 13 bankruptcy without his or her spouse doing the same thing. There are many reasons why one married partner might prefer not to file although the other partner is, such as the desire to maintain one individual’s credit rating or a lack of jointly titled personal or real property between the married couple that would be affected by a bankruptcy filing.
Regardless of the situation, however, certain information must be provided by both partners, even if only one of them is actually filing. The requirements for this will vary from area to area, but, in the Eastern District of Michigan, where I practice, the income and employment information for a non-filing spouse is required in a couple of different ways.
First, unless the married partners are legally separated and are maintaining completely separated households, both individuals’ actual, earned gross income is required for each of the 6 months prior to the month in which the bankruptcy petition is being filed for purposes of the Means Test. This will not vary by geographic area as it is required by the Federal Bankrtupcy Code. The Means Test is a mathematical formula that computes an average household monthly income for that 6-month period and determines whether the filer is above or below the median income for their state. If they are above the median, there is a presumption of fraud that must be rebutted for the petition to avoid being dismissed. If they are below the median, the petition should succeed. What may vary is the documentation required to prove this income received: in the Eastern District of Michigan, both partners must provide 6 months’ worth of actual pay-advices (pay-stubs) or other documentary proof of income.
Next, what may further vary from area to area is the extent to which the non-spouse’s income is required for the computation of the average household income and expenditures captured on Schedules I and J of the Bankruptcy Petition. Schedule I lists the gross income, withholdings, and, finally, net income for each wage-earning partner in an average month. Schedule J lists the entire household’s average monthly expenditures in various specific areas, such as rent or mortgage payment. The court-appointed trustees who oversee each bankruptcy petition in the Eastern District of Michigan with an eye toward liquidating unexempt assets for the benefit of creditors whose debts will be discharged by the bankruptcy want to see both income streams reflected separately in Schedule I and the household expenses listed in aggregate on Schedule J.
Many of my propsective clients who are married but wishing to file alone, without their spouses, ask me why they must provide this information. Frequently, they are not necessarily on the best of terms with their spouses and are sometimes working to establish a financial jumping-off point for a full separation or divorce from their spouse. It is not always comfortable for them to approach the spouse to obtain this information. Nevertheless, it is required, and those who are in such a position should be aware of this requirement in advance.
If you are a resident of Michigan and are interested in filing for bankruptcy and have questions about this or any other topic, please contact me at jhilla@aronofflinnell.com or (248) 977-4182 to schedule a free, initial consultation.
