Question Getting married in CH. 13 separate households

[Manup]

After a divorce 5 years ago, I didn't think I would ever think about getting married again, but life happens. I am 26 months in of a 60 month plan. I am not getting married anytime soon, but it has got me curious about how it might work. I have a basic understanding that if we get married and live in the same household that all DMI between both of us goes toward the plan. We live about 100 miles apart, and our jobs would force us to continue to have different houses for about 2 years. I need to keep current job for 2 years for retirement. So, my question is since we are maintaining different households would my chapter 13 effect her?

[shipo]

My wife and I were separated and living in two separate locations when I filed for my Chapter 13 and maintained that state for the duration of my bankruptcy and then we moved back in together shortly after my Discharge. In your case, it would be easier/simpler if you lived apart and don't remarry until your bankruptcy is over; however, if you choose to marry prior to filing your final tax return of your bankruptcy, then I'm guessing you should contact your attorney and alert the Trustee of your change in status.

While my case is rather different than yours, if you need to amend your filing, then you'll probably need to do what I did and prove separate living expenses and such.

[justbroke]

Congratulations. I must say that getting married while in a Chapter 13 can get complicated. Especially with separate households. You would need to review all the numbers and the impact of maintaining the two separate residence, but i don't think it is insurmountable.

If you do get married and are subjected to a new Means Test, the problems will come with the now included spousal income. If it's substantial, and covers more than your new spouse's "separate" residence and expenses, then it is your income for purposes of calculating "disposable monthly income" (DMI). Those separate expenses are not controlled, as your new spouse is not a debtor in your case, but you may need to show that they do in fact exist.

Of course your attorney may have more experience with this. I divorced during a Chapter 13 and then split into separate residences. I had to redo the Means Test and Schedule I/J. In the end, it wasn't too complex and the Chapter 13 Trustee didn't object to anything.

[Manup]

Thanks shipo and justroke. I have seen lots of people say that your new spouse is not responsible for your debt; however, it looks like they really are. If you marry someone who is paying their bills and has money left over at the end of the month, their DMI goes towards your plan. If you're in a chapter 13 plan then you are already giving your DMI up every month, so the new spouse is the one suffering. Planning on waiting until plan is over, but we shall see.

[shipo]

Manup, waiting is by far the easiest from a logistics perspective.

[justbroke]

Thanks shipo and justroke. I have seen lots of people say that your new spouse is not responsible for your debt; however, it looks like they really are.

Lots of people are correct. The spouse is not responsible for your debt.

If you marry someone who is paying their bills and has money left over at the end of the month, their DMI goes towards your plan.

Well, it's disposable, right? Married people receive certain benefits that you don't receive when you're single and separate. One of those things is that income and money earned during the marriage is community property. When it comes to a Chapter 13, household and spousal income do matter and that's because a Chapter 13 is both voluntary and designed to payback creditors what you can afford to pay them. If your household has more income, then you may have more disposable monthly income.

The same holds true if you didn't marry the person and you both lived together! To the extent that your roommates, adult children, or even other family live in your home, they "offset" your expense. Whatever it is that they contribute to the household is subtracted from your allowances in bankruptcy. The only difference between being married is that marital income is included up front rather than only included to the extent that the non-filing spouse contributes to the household. Clothing, car payments (of any amount), personal debt, and other significant expenses are all open.

As one judge put it, bankruptcy is to give the debtor a fresh start, and not a head start.

If you're in a chapter 13 plan then you are already giving your DMI up every month, so the new spouse is the one suffering. Planning on waiting until plan is over, but we shall see.

Not necessarily suffering. They just need to spend the DMI. They are not limited by what they can consume that DMI in their budget. For example, gym membership, entertainment expenses (put any reasonable amount), eating out (yup it's their money). The budget just can't be unreasonable. I would work with an attorney to get more details on the types of expense that are typical for non-filing spouses.

There are a lot of things they could do including building a nest egg for the family. For example, I have friends where one salary is enough so the other spouse (still with a 6-figure income) contributes the maximum annual "post-tax" contribution to their employers 401(k). That amount is over $50K a year.

So, yes, it requires planning.

[Manup]

Thanks, justbroke. Your explanation really helps me to make more sense on how DMI works relating to the household income. I was having a tough time wrapping my head around the difference between having a roommate vs being married pertaining to household income. Now, it makes sense.

Question- this would not pertain to my situation, but it has me thinking. If someone in a chapter 13 married someone not involved in the plan then it could be possible that the payment could be higher than the chapter 13 debtors bring home income. Assuming the new party has a high income.

[shipo]

Question- this would not pertain to my situation, but it has me thinking. If someone in a chapter 13 married someone not involved in the plan then it could be possible that the payment could be higher than the chapter 13 debtors bring home income. Assuming the new party has a high income.

Potentially correct. As with much else in life, "it depends".

[justbroke]

Yes, as shipo says, it depends. There are some Chapter 13 Trustee's that don't care what happens after confirmation, so long as you continue to pay. There are other Chapter 13 Trustees, however, that keep an eye on debtors that have a "significant" increase in income. Don't ask me what involves significant, but the threshold has been, at least in the past, a 10% year-over-year increase. This also seems to be only for those Chapter 13 Trustees that require that the debtor submit a copy of their annual tax return to the Trustee for review.

Those in a 100% plan should not need worry about this.