Chapter 13 only in husbands name can wife buy?

[bkandhappy]

If a husband files a chapter 13 only in his name does it matter what the spouse does with her money, such as buy a car with out effecting the chapter 13? This is in califoria a common property state.

Also can the spouse earn money after the filing and not effect the chapter 13 as she is currently unemployed to take care of the kids.

[justbroke]

It doesn't matter what the spouse does, but it could affect the household expense budget. In a Chapter 13 where the debtor is married and is the only one to file the income of the non-filing spouse is used in every calculation of the Means Test and the Schedule I/J forms. While that spouse's income can be reduced using the marital adjustment, that is done in order to confirm the plan. If that non-filing spouse later decides to buy something, where does the money come from?

Unless the debtor is in a 100% Chapter 13, this could make it difficult. A car is likely possible if it's replacing an existing vehicle. A house may be more difficult unless it too is replacing another house.

The non-filing spouse can earn additional money after that "marital adjustment" is done, but I do not personally know if the debtor needs to report that additional money. In districts which require that the annual tax return is given to the Chapter 13 Trustee, that likely means that they are watching the total household income. That could become problematic with post-confirmation additional income.

At least, those are my thoughts.

[bkandhappy]

Its a 0% payback chapter 13, sorry I should have said that before, does that change things?

[despritfreya]

This is California. As you state, you live in a community property state. His income is your income. Your income is his income. All income supports the Plan and is property of the bankruptcy estate. Diverting community income to purchase a community asset such as a vehicle without obtaining a court order or, at least the trustee's blessing, especially if you (and the community) are financing a portion of the purchase, may be questionable.

I assume the two of you have met with or have hired an attorney. Discuss this with him/her.

Des.

[justbroke]

It could. It would be up to the Chapter 13 Trustee as to how much they monitor your household income. From what I have read here on this site, a Chapter 13 case that pays back less than 100% to the unsecured creditors and the debtor's spouse is not filing, will typically yield additional scrutiny by the Chapter 13 Trustee. The Chapter 13 Trustee is, and should be, more cognizant of cases where the household income is significant yet the non-filing spouse's income is being removed from the disposable income calculation through the Marital Adjustment.

I can't tell you how a specific, or any, Chapter 13 Trustee will see your non-filing spouse's income if it is excluded from the "income" test. I do know that, from various cases around the country, the Chapter 13 Trustee will usually be more suspect of a case where only one spouse is filing. When excluding significant amounts of the non-filing spouse's income the non-filing spouse must show that they have corresponding debts in their name. That is the purpose of the Marital Adjustment; it allows the non-filing spouse to continue paying their own debt without fear of it being used to pay the debtor's Chapter 13.

I'm know that there are various strategies. I do know whether having one spouse file and the other not file is one of those strategies. There are many factors at play and a Chapter 13 attorney can weed through the issues. One of the biggest ones is that the hypothetical Chapter 13 discharge in a community property state is lost if you divorce. That would leave the non-filing spouse holding the bag or forced to file bankruptcy themselves.

These strategies are delicate and hopefully you have a Chapter 13 attorney practicing in your State or District. I'm not in a community property State and haven't needed to deal with this even though I did file an Individual Chapter 13 case with my spouse not being a debtor. She didn't make any money and no debt was in her name, so it was pointless to include her.

[bkandhappy]

I think its just going to be better to not the the spouse work at all. Its only 36 months anyway, that will fly by. The less complicated the better. Spouse has not worked for 13 years, and has no debt and there is no JOINT debt. I am curious if she can finance a car in her name only, she was preapproved for a no proof of income car loan or does the community property state cause issues with that.

Yes we are currently trying to find a lawyer.

[despritfreya]

Spouse has not worked for 13 years, and has no debt and there is no JOINT debt.

I think there is a small disconnect. You understand that California is a community property state but you indicate that there is no "joint" debt. Unfortunately, unless all of the debt was run up before you got married, the debt is "joint" in the sense that it is community debt. With a few exceptions debts incurred after the date of marriage are community debt and are the responsibility of both spouses regardless of who signed on the dotted line.

I am glad you are meeting with an attorney.

Des.