There are numerous instances in which either the husband or wife has incurred a substantial amount of debt that is only in one of their names and for which only one of them is responsible for payment. It is possible that one spouse has substantial medical expenses and the other has not agreed to pay them. One spouse may have credit cards in his/her name alone, while the other spouse has nothing to do with the credit cards. Regardless of the cause, one spouse must file for bankruptcy while the other does not.
The fact that only one spouse can file for chapter 7 bankruptcy does not preclude the involvement of the other spouse. In reality, the second spouse is not a party to the bankruptcy, but his or her income and expenses are required for the Chapter 7 filing.
To file for Chapter 7 bankruptcy, a person (debtor) must not earn an excessive amount of money. The bankruptcy laws provide two methods for determining whether a person's income is excessive. The first method is to compare the debtor's monthly income to the state's median income for individuals in the same situation. If the debtor's income is less than the median of other individuals, he passes the income test and may proceed with Chapter 7 bankruptcy filing. If the debtor's income is greater than the median income of other individuals, the law applies the ""means"" test.
The second method for evaluating a debtor's income is the ""means"" test. In this examination, the debtor takes his monthly income and deducts certain expenses permitted by law. The resulting amount is considered the debtor's disposable income. If the debtor's disposable income is below a certain threshold, the debtor may proceed with Chapter 7 bankruptcy filing. If the debtor's disposable income exceeds a certain threshold, he or she is ineligible to file for Chapter 7 bankruptcy.
Since it is possible for one spouse to have a high income and the other to have a low income, the only way to accurately implement the aforementioned two methods for determining income is to account for both spouses' income and expenses. Therefore, the total income of both spouses must be included in the bankruptcy filing, just as both spouses' expenses must be included, even if only one spouse is responsible for a particular expense.
The purpose of the bankruptcy regulations is to evaluate a debtor's household financial situation (income and expenses) to determine if a person (debtor) is eligible to file for Chapter 7 bankruptcy. If the criteria are met, only one spouse can petition for chapter 7 bankruptcy.
This is commonplace knowledge. Consult an attorney licensed in your state if you require specific information or have any queries of any kind.
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