Spousal Deductions and the Bankruptcy Means Test in New York City
In order to qualify for Chapter 7 bankruptcy relief in New York City you must first pass the bankruptcy means test. The means test looks at your income and expenses and includes them with allowed deductions for things like taxes and other common expenses to calculate your disposable monthly income. Your disposable monthly income figure needs to be in line with national and local averages for a household of your size to qualify for bankruptcy relief. Since the means test compares your disposable income to that of your neighbors and because New York City is such an expensive place to live passing the means test is actually easier in Manhattan, Kings, Queens, or Richmond County even for very high income earners.
Even if you file bankruptcy without your spouse you will still need to include your spouse’s income on your bankruptcy on the means test if you live together or are supporting each other in any way. The income portion of the means test is based on the total household income, not just your income. Depending on the living situation this can sometimes include people living with you other than your spouse. There is a lot most people fail to consider. The unbiased eyes of an attorney can help you find answers that love may blind you to. Many spouses automatically assume that under the eyes of the law they are equally responsible for each other’s debts and financial troubles. Every spouse of course wants to protect the interests of the other, but when it comes to bankruptcy a married couple might find a better result by considering some debts and expenses to be independent.
If your spouse isn’t filing with you they probably have expenses that can be deducted from the means test, because the expenses are in no way helping the household. They are often overlooked, but expenses like a spouse’s credit card payment, student loan payment, child support payment, or payments on investment properties not in your name can be deducted from the means test. If done correctly these deductions can make all the difference to the outcome of a bankruptcy case, but you need an attorney to read between the lines.
As an objective outsider an attorney will save you big money by looking deeply into the debts in your marriage. It’s not to drive a wedge between you and your spouse, but simply to put the spouse filing in the best light. Many spouses think they share everything. When it comes to bankruptcy this can be both a good and bad thing. We have seen people make some big mistakes, losing assets that could have otherwise been saved.
If you can’t make your ends meet, start thinking about your rights as a debtor in New York City. You and your spouse can find some protection even if only one spouse files. You have the legal right to bankruptcy protection and can easily break out of the bad financial situation you’re both in now. Our law firm maintains a 99% Chapter 7 Bankruptcy discharge record in New York City as of 8/31/16. Contact the Law Offices of William Waldner online or at 212.244.2882 to arrange a free bankruptcy consultation today.
**** DISCLAIMER: This article is intended for educational purposes only. By reading no attorney-client relationship has been created. Prior results do not guarantee a similar result for future clients.