A common New York Bankruptcy Question: Does my Spouses Income count towards the Means Test…YES!

A very very short post which will answer the question that many of my Bankruptcy clients in Manhattan and Brooklyn have.  Namely:  “If I am filing for Bankruptcy but my spouse is not, do I still have to include their income in a bankruptcy in New York City?”  The answer is yes.  A resounding yes.

For purposes of Bankruptcy, the Means Test looks at the household income of every person in that household, regardless of whether or not that person is filing.  The caveat here, however, is that while you cannot deduct certain expenses from the Means Test, your spouse can.  And some attorneys don’t even know about this.  In other words, lets say you made 40,000 a year and your spouse made 40,000 a year.  You cannot deduct your gym membership, credit card payments, support to family members for purposes of the means test.  HOWEVER, the spouse that is not filing CAN deduct these expenses and its totally acceptable.

The long and short of it is you shouldn’t automatically think that if your spouses income is included you wont qualify or vice versa.  The Means Test is a complicated (and exciting, yes Im a nerd) formula, which only a lawyer should deal with.

I promise a longer post for the next one, but this is one of the more mundane questions I get and I didn’t want to put you guys to sleep…anymore than I usually do.