How does the marital adjustment apply to your means test when you file without your spouse? First it is fairly common for one party to a marriage to file bankruptcy without the other. Some of the reasons this might happen are:
- Only one spouse has debt
- One spouse can not file because of a previous bankruptcy case
- Your husband/wife simply is opposed filing bankruptcy
- One spouse does not want to take the credit hit
In any case, if only one of you is filing you still have to include the income of the other to compute current monthly income, known as CMI, in the means test. The fact that you are filing on your own without your husband or wife might be a blessing is disguise. It is possible to reduce the computed six month annualized average income in the means test. This is accomplished through the marital adjustment.
The marital adjustment to the means test allows reduction of CMI as the result of certain expenditures made by the non filing spouse. Some of these things are reductions neither of you can take in the means test if you file together. The bankruptcy code states that marital adjustments are things our spouse spends money on that does not benefit your household. These things can include:
- Child support
- Spousal support or alimony
- Separate debts
- 401k, 403b, plan loans, IRA contributions
- Gym memberships
- Attorney fees
- What San Francisco bankruptcy attorney Cathy Moran calls bad habits.
If you are paying child support, spousal support, or alimony there is a place on the means test for you to enter these items, not your spouse. Separate debts can include credit cards, car payments, student loans.
Payments for 401k or IRA plans are a big one. In the chapter 7 means test you are not allowed to reduce your calculated disposable income for 401k, 403b, IRA contributions, or plan loan payments. Your non filing spouse can do it in the marital adjustments.
The monthly amount paid by your husband or wife for any matter not benefiting your household can be included in the marital adjustments. Typically I see attorney fees to defend post decree motions in divorce court for custody or support issues. They might be fees for his drunk driving charge, or some other criminal charge. Bad habits are things you husband or wife does that does not benefit your household. What are bad habits? Be creative here. How about smoking, drinking, gambling, drugs?
One thing to remember though: The adjustment is for the amount your spouse pays monthly. You cannot use the full amount for each marital adjustment in the means test.
The marital adjustments for a married person filing bankruptcy alone could very well be the difference between having to file a chapter 7 or a chapter 13. This is also a very important reason that trying to figure out the means test online yourself is doomed to failure. These calculators do not take into account these nuances in the law. Relying on these alone could have you paying your bills in a chapter 13 reorganization plan when you qualify for a chapter 7.
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