Non filing spouse marital adjustment

[tg16]

Suppose a non filing spouse's income is used to pay their own credit cards and the rest goes into saving account owned only by the non filing spouse. Since, in this case, all the non filing spouse's income does not contribute to any household expense, could the full amount be used as the marital adjustment?

[justbroke]

The savings would not be allowed. Likely, it would be treated as money available to the household... to pay household debt (just as it would normally under non-bankruptcy). The Chapter 13 and Chapter 7 Trustees will nitpick anything that you put in the so-called marital adjustment boxes. Otherwise a person who is married, living in the same home, with a spouse with significant income, could shield most of the marital income from the bankruptcy.

The reason is that, whether filing jointly or just one is filing, all income of the marriage is included. In fact, all other household contributions are included, so if you have adult children that are working, they are likely offsetting your expenses as well. Each $ that you want to exclude from the non-filing spouse will need to be explained and likely require documentation. Expect the Trustee to be very interested in each expense that you are attempting to offset.

Since this looks like you want to file Chapter 7, the United States Trustee (UST) will likely become very interested in your case. The UST is likely going to demand documentation of these "separate" expenses. Regardless of the documentation demand, the non-filing spouse can include a variety of personal expenses from 401(k) savings to a gym membership. However, the expense may require sufficient documentation of the expense both in the past and continuing into the future.

(Notes: any savings already in the non-filing spouses account is protected as their personal property. Make sure there was no commingling -- in case the Trustee goes snooping to see if that money was ever in a joint account. Additionally, if you have any joint creditors there are likely going to be issues with the discharge, especially tax debt, as the creditors will go after the non-filing spouse. If you are under-the-median -- as a household -- it is unlikely that there would be the extra scrutiny.)

[Scarlett1234]

Do you know between girlfriend and boyfriend, if they live together, but only one is filing, the other one has some savings under their own name, no joint debt or joint saving, are savings not allowed either? Will it be expected the savings should be used to pay all the bills in the house and credit card debts for the filing person?

[shipo]

tg16, my wife and I went through a very difficult patch between 2008 and 2015, not only did both of our small businesses fail, but our marriage nearly failed as well. By the time bankruptcy was a "when not if" scenario in our collective futures, she stated she wanted out of the marriage in no uncertain terms, and we ended up separating in 2013. In 2014 she filed for a Chapter 7, and in 2015 I filed for a Chapter 13; due to our separation, the scrutiny our filings went through was significantly reduced compared to what we would have had to endure had we stayed together.

I told you the above story to kinda-sorta suggest this; have the two of you considered separation? If so, it might make life easier in the near term.

Epilogue to my story above; once the extreme financial stress we were under abated, we started spending time with each other again, and ultimately got back together.

[justbroke]

Do you know between girlfriend and boyfriend, if they live together, but only one is filing, the other one has some savings under their own name, no joint debt or joint saving, are savings not allowed either? Will it be expected the savings should be used to pay all the bills in the house and credit card debts for the filing person?

@scarlett1234 can you use the "Quote" feature to reply rather than the comment feature? I can't reply directly to a comment.

For purposes of bankruptcy, a boyfriend and girlfriend have no legal obligation to one another. in those cases, the income of the non-filing friend would not count at all. But, and there's always a but, if they share a household and the non-filing friend contributes to household expenses the tables change. To the extent that the non-filing household member (friend) offsets the expenses, the debtor must also reflect that contribution to the household expense by reducing their expenses (on Schedule J) dollar for dollar.

[Scarlett1234]

@scarlett1234 can you use the "Quote" feature to reply rather than the comment feature? I can't reply directly to a comment.

For purposes of bankruptcy, a boyfriend and girlfriend have no legal obligation to one another. in those cases, the income of the non-filing friend would not count at all. But, and there's always a but, if they share a household and the non-filing friend contributes to household expenses the tables change. To the extent that the non-filing household member (friend) offsets the expenses, the debtor must also reflect that contribution to the household expense by reducing their expenses (on Schedule J) dollar for dollar.

Sorry I am not very familiar with all these features on the website yet. Hope it is right this time. I have learned about the contribution part from this forum, the attorney I asked , his paralegal asked how much debt I have, how much I make. I don't have debt and I don't have a job at the moment, but her questions made me worry it is expected I should drain my savings to cover the household expense as much as possible and even the filing member's debt. I didn't do that because I didn't want both of us to sink. I am ok with some contributions expectation ,do you think the trustee would expect me to pay for more than half of the household expense since I don't have debt and have some savings (was thinking about using it for debt settlement but cant decide),while the other member has debt?

[shipo]

Scarlett1234, I take it you've moved on from the concept of debt forgiveness and are now thinking your significant other should file for a bankruptcy? If so, that's good.

Regarding how a Trustee will view your contributions, my understanding is, they cannot compel you to contribute more than your fair share, and by that I mean, if it is just the two of you, they a 50/50 split of expenses. Beyond that, your savings, income, and other assets are irrelevant and not looked at by the Trustee.

This of course is exactly opposite of the situation I was in when I filed a Chapter 13 back in 2015; my wife and I were separated at the time and even though she had her own income, I had to make monthly contributions to her and our daughter to keep them whole. The good news was these payments/expenses to keep them afloat were accounted for in my filing and lowered my monthly payments to the Trustee.

[Scarlett1234]

Scarlett1234, I take it you've moved on from the concept of debt forgiveness and are now thinking your significant other should file for a bankruptcy? If so, that's good.

Regarding how a Trustee will view your contributions, my understanding is, they cannot compel you to contribute more than your fair share, and by that I mean, if it is just the two of you, they a 50/50 split of expenses. Beyond that, your savings, income, and other assets are irrelevant and not looked at by the Trustee.

This of course is exactly the opposite of the situation I was in when I filed a Chapter 13 back in 2015; my wife and I were separated at the time and even though she had her own income, I had to make monthly contributions to her and our daughter to keep them whole. The good news was these payments/expenses to keep them afloat were accounted for in my filing and lowered my monthly payments to the Trustee.

Thank you for sharing your experience with me again. I was trying to save his credit and future job prospect but I am worried it may be too risky to put all the emergency found towards debt settlement and still have problem haunts him later on, none of the creditors has responded about the settlement neither, maybe they don't want to put the agreement in writing.
Because the last few months he got the extra unemployment,he has been paying more than 50% of the rent, utility bills , do you think 50/50 would be what trustee will accept ? We have to split everything, not just rent, but utility bills, everything? He cant contribute more than 50% without raising questions?
I am feeling very hopeless at this point, he is planning to go to a local college but the admission bar has been setting higher than I expected, it is likely he won't be able to get in, there is no other college so we may have to move again, I don't know how his credit can pass any rental application at this point, I was going to make a post asking how people get rental once their credit score became too low. Can I just go apply on my own and not to mention him in the application?

[justbroke]

Major property management companies can rely on the credit strength of one individual, so long as the other tenants don't have evictions in their history. Usually the person upon which credit is relied should also have sufficient income to qualify for the rental agreement. Most national property management companies (and large apartment complex managers) want the household to earn at least 3X the monthly rent, monthly. You may find individual or smaller landlords to be more lenient so long as one of the leaseholders have sufficient credit and income.

You must also list everyone on the lease that will be living in the apartment/home. Failure to list any person over 18 -- including some under the age of 18 -- is usually a violation of the terms of the lease and you could be found in default under the lease. Always be upfront when it comes to tenancy.

I also find it better to get into a new lease before you file bankruptcy. Bankruptcy is usually not tolerated by most large(r) property management companies if it occurred within 2 years of filling out the lease application. However, I personally found that they generally go by credit score so if your score is above 620 with no criminal or eviction records, then they are more eager to lease. I leased 2 months after my discharge and had $0 deposit. I also leased while in my Chapter 13 with a refundable deposit of $350 on a $2,000/month apartment. Clearly my credit was good enough!

[Scarlett1234]

Major property management companies can rely on the credit strength of one individual, so long as the other tenants don't have evictions in their history. Usually the person upon which credit is relied should also have sufficient income to qualify for the rental agreement. Most national property management companies (and large apartment complex managers) want the household to earn at least 3X the monthly rent, monthly. You may find individual or smaller landlords to be more lenient so long as one of the leaseholders have sufficient credit and income.

You must also list everyone on the lease that will be living in the apartment/home. Failure to list any person over 18 -- including some under the age of 18 -- is usually a violation of the terms of the lease and you could be found in default under the lease. Always be upfront when it comes to tenancy.

I also find it better to get into a new lease before you file bankruptcy. Bankruptcy is usually not tolerated by most large(r) property management companies if it occurred within 2 years of filling out the lease application. However, I personally found that they generally go by credit score so if your score is above 620 with no criminal or eviction records, then they are more eager to lease. I leased 2 months after my discharge and had $0 deposit. I also leased while in my Chapter 13 with a refundable deposit of $350 on a $2,000/month apartment. Clearly my credit was good enough!

Thank you for your tips , it made me feel a little better . Do you mean I can apply for the property by myself if my credit is good and if I were to meet income requirement by myself ,then get approved , only when I sign the lease , I must list him on there with me ? Or do we have to apply and have both credit check ran by property managers/landlord , but they will likely rent it to me because they will rely on my credit and income ,ignore his credit . I haven't applied to find out yet because I already felt it is impossible to get any .

[justbroke]

You should list all at the time of application. I added someone after applying on my own and they still ran his credit (my stepson)! Of course he has a 780+ so it wasn't a factor, but they still checked him for criminal convictions, sexual offender list, evictions and credit score.

[Scarlett1234]

You should list all at the time of application. I added someone after applying on my own and they still ran his credit (my stepson)! Of course he has a 780+ so it wasn't a factor, but they still checked him for criminal convictions, sexual offender list, evictions and credit score.

He doesn’t have eviction nor criminal convictions , but many debt now charged off and sent to collections , will I still stand a chance to get rental by myself if I have him on application ?

[justbroke]

Scarlett1234 as I wrote above, I think that so long as you qualify on your own, the clean criminal and eviction history for your significant other is positive, and their credit may not be a factor. But that depends on what that particular management company/landlord allows. Some allow a tenant to list the significant other as an occupant only, without financial liability (my last place allowed someone to be placed in that type of lease). This allows you to list an occupant for occupancy purposes only (household size, amenities, keys, gate codes, etc).

You really won't know until you try some of them. You may actually want to call them and ask for details about their "qualification" rules. You may check various websites of places that you think you want to live and check their specific rules since many publish them online. Speaking to a leasing manager, without applying, may put you at ease. Why not talk to a few of them in the area? With the pandemic, I'm sure they're seeing lots of current and potential tenants with issues.

I was actually shocked that I was still in my Chapter 13 and was approved by a major "upscale" community with a $350 deposit on a $2,000/month 3-bedroom apartment. I have also co-signed for two other people -- in different apartments managed by national management companies. Those people had poor scores and required a guarantor. For what it's worth, I'll never set my self up for that type of liability again. On one of them, I actually wrote on the contract that my guarantee ended after 1 year of residency.

In the end, a potential landlord just wants to know, by some evidence such as credit scores and income, that the tenant or tenants will be able to meet their financial obligation concerning the lease.

[Scarlett1234]

Scarlett1234 as I wrote above, I think that so long as you qualify on your own, the clean criminal and eviction history for your significant other is positive, and their credit may not be a factor. But that depends on what that particular management company/landlord allows. Some allow a tenant to list the significant other as an occupant only, without financial liability (my last place allowed someone to be placed in that type of lease). This allows you to list an occupant for occupancy purposes only (household size, amenities, keys, gate codes, etc).

You really won't know until you try some of them. You may actually want to call them and ask for details about their "qualification" rules. You may check various websites of places that you think you want to live and check their specific rules since many publish them online. Speaking to a leasing manager, without applying, may put you at ease. Why not talk to a few of them in the area? With the pandemic, I'm sure they're seeing lots of current and potential tenants with issues.

I was actually shocked that I was still in my Chapter 13 and was approved by a major "upscale" community with a $350 deposit on a $2,000/month 3-bedroom apartment. I have also co-signed for two other people -- in different apartments managed by national management companies. Those people had poor scores and required a guarantor. For what it's worth, I'll never set my self up for that type of liability again. On one of them, I actually wrote on the contract that my guarantee ended after 1 year of residency.

In the end, a potential landlord just wants to know, by some evidence such as credit scores and income, that the tenant or tenants will be able to meet their financial obligation concerning the lease.

I understand. I reached out to 2 realtor,one is saying an apartment would be easier to get SFH might be hard . I was bothered by the noise when lived in an apartment so I was looking for a house. The other one surprisingly told me all landlord will want to run credit check and expect a good credit score , I didnt believe that because I have seen so many people being affected by Covid. I am not sure there are many people will meet those high requirements, if they will, they would be buying not renting. It got me discouraged and I am not feeling well in general so I haven't checked since you replied. But it does sound a lot better than I expected. On a side note, if I find a job soon and if I am able to buy a house under my own name,can my SO still claim the rental expense on schedule J if he lives in my house and pay rent to me? Do we have to have a real tenant contract ? This is the one last resort I can think of is to buy a small cheap house if can't find a rental.

[justbroke]

Your significant other (SO) would likely need proof of the rent payments. The type of proof required, since this is not through a third party, would be documentary proof. That documentary proof could be in the form of regular cancelled checks.

When I did rent a single family home, I did so on the sole strength of my credit and income. Landlords like to see consistent employment (the longer with the same employer the better) and monthly income -- of the working person -- of at least 3X the rent. The better you appear credit, character, and income-wise the more the landlord or owner will consider you an ideal candidate. In tight rental markets, that can make a difference to live in desirable areas.

[Scarlett1234]

Your significant other (SO) would likely need proof of the rent payments. The type of proof required, since this is not through a third party, would be documentary proof. That documentary proof could be in the form of regular cancelled checks.

When I did rent a single family home, I did so on the sole strength of my credit and income. Landlords like to see consistent employment (the longer with the same employer the better) and monthly income -- of the working person -- of at least 3X the rent. The better you appear credit, character, and income-wise the more the landlord or owner will consider you an ideal candidate. In tight rental markets, that can make a difference to live in desirable areas.

I will see what I can do on my end to increase our chance. Can't thank you enough for your patience and guidance.