You usually need to include your spouse’s income when you file bankruptcy, even if you file individually.
When a married debtor consults with me about their debt problems, sometimes they want to file bankruptcy under their name alone. Filing bankruptcy for married people provides the same choice as filing taxes: you may file an individual bankruptcy petition or a joint petition. These debtors often do not want to include their spouse’s income, because in bankruptcy, the less income you show up to a certain point, the better the result.
A common reason for filing individually is a second marriage where the debtor has debt from a prior marriage that their current spouse had nothing to do with, and wants nothing to do with. Another reason is that their spouse has great credit, and they don’t want to do anything to harm that credit. Yet another example is where most of the income is under the other spouse’s name.
However, bankruptcy law requires that all household income be reported, regardless of whether one spouse or both spouses file bankruptcy. If both spouses live in the household, then both incomes are reported. If the household only includes one spouse (i.e., the spouses are separated or have separate households), then only the debtor’s income is reported. (The reason for this law is that bankruptcy is for people who cannot afford to pay their debts, not those who don’t want to pay them. If your household income, including your spouse’s income, is enough to pay your debts, you are expected to pay them.)
If you have serious financial problems and are unable to pay your debts, contact a bankruptcy attorney today to make an appointment for a free consultation, and we can show you whether it would be better to file an individual or joint bankruptcy and how your non-filing spouse’s income must be listed.