employment / unemployed query (Shedule I)

[PAGASA]

Hello, I have a question in regards to employed or unemployed. I am married and not filling jointly. I am unemployed and my wife is a 10 month employee at a school district. She gets June and July off. Do I still have to list her as income even though technically she is unemployed for the months of June and July? What is considered unemployed for purposes of Bankruptcy? Thank you in advance.

[justbroke]

There is no unemployed when it comes to bankruptcy. The Means Test, which was created as part of the 2005 changes to the Bankruptcy Code, talks about "income". When you complete the forms, you must provide income (including non-filing or filing spouse income) as part of the Means Test. It is based on the six-months preceding the month in which you filed. So, if you filed in July then your income for that 6-month lookback would be January - June.

Now, you can deduct your non-filing spouses expenses separately on the same form. This would be the part that the non-filing spouse "does not" help with the bills and your expenses. If you're living on that one income, then likely that spouse is paying for something (housing, food, etc).

The key is whether you are below the median income for your area. If you're below the median income (including your wife's income), then you likely qualify because you are considered "under" the median and you don't complete the other sections of the Means Test. Please note that this "median" income is determined using that same 6-month lookback.

And, remember that Schedule I/J are "forward" looking (not backwards looking like the Means Test). If something is going to change in the future, there's a spot at the end of Schedule I to make that known in writing.

Are you filing on your own? Do you have any assets (car, money in the bank, equity in home, lots of furniture or other property)? If you are filing on your own, you need a good guidebook.

[PAGASA]

Thanks for the reply. I think maybe my question was a little misunderstood. To clarify, on schedule I >part 1 > 1 > Debtor 2 or non filing spouse > it has a checkbox for "employed" OR "non employed.

Given my wife's circumstances, is she considered employed or unemployed? Yes, I'm filing on my own, and i don't have any assets. My case is pretty straightforward.

[justbroke]

That question may be a legal question. If I were personally filing the forms I would have checked employed, since I was a.) not laid off and b.) still an "employee" of the school district. While filing during the summer could make a Means Test lean in your favor (because non-school-year income may have fallen off for purposes of the lookback), the Trustees may see through this when they ask what your spouse did (or does) for a living.

And, remember that Schedule I/J are "forward" looking (not backwards looking like the Means Test). If something is going to change in the future, there's a spot at the end of Schedule I to make that known in writing.

I don't think it would matter anyhow unless your Spouse's annual income, which will be readily apparent when you submit your last 2-3 years of tax returns to the Trustee, shows that you have sufficient income to fund a Chapter 13. If you're trying to avoid Chapter 13 by hiding the income, I can't advocate that strategy. In that case, I could only suggest that you consult with some local attorneys on just what you should check and how they would proceed in a case like this.

[PAGASA]

Thanks for the reply. I appreciate it. I'm not trying to hide income or find loop holes. My wife just makes around 14.5k in those 10 months so I'm not worried about the Means Test. My concern was if I should check employed or unemployed for her.

[justbroke]

I am not as familiar with these new forms as I was the older forms (the forms were updated in December 2013). The new Schedule I clearly reads, under the employment section to "[i]nclude part-time, seasonal, or self-employed work".

[LadyInTheRed]

I think I would check the "employed" box. The fact that she has two months off each year doesn't make her unemployed any more than somebody who is on vacation is unemployed.