My Husband (or Wife) is Filing a Bankruptcy…How Will It Affect My Income & Expenses?

When your spouse files for bankruptcy, s/he must complete income and expense schedules that detail your household income and expenses.  Even though you are not part of your spouse’s bankruptcy, your income and expenses must be shown on the schedules.  Sometimes the schedules will list only the contribution you make on a regular basis to the household, and sometimes your actual income and actual expenses will be listed.

So what if your income is quite a bit more than your expenses?  Will that impact on your spouse’s bankruptcy?  Chances are it will.  It is possible that you can just list a certain amount as your contribution to the household each month.  But it is likely that your spouse’s bankruptcy trustee will want to know more about your actual income and what you are spending your money on.  The trustee will not think it is fair if your spouse can’t afford to pay his/her creditors while you are socking away your excess income.   The trustee cannot force you to contribute to your spouse’s creditors, but the trustee can make a motion to deny your spouse a discharge of his/her debts.

If your spouse files a Chapter 13, the trustee is going to want to look at tax returns each year.  If your income goes up substantially, it is likely the Chapter 13 trustee will want your spouse to pay more in to the Chapter 13 plan so the creditors receive the benefit of your increased income.

Next: How your spouse’s bankruptcy can affect your children’s educational expenses.