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Unmarried Couples: Do You Need to Report Co-Habitant’s Income in Bankruptcy?

A non-marital, romantic cohabitating couple will have to consider several things if one decides to file for bankruptcy. Although cohabitating couples are not considered married, and are therefore ineligible to file jointly, their decisions to file for bankruptcy will have an effect on the other, non-filing individual.

The Means Test is a test designed to weed out people who make enough money to pay off at least some of their debts from filing for Chapter 7. It determines this by analyzing the income and expenses of all individual bankruptcy filers against a set median income for each specific area. If you fall below this median, you can file for Chapter 7 with no problems. If you fall over this median, you will have to prove you can file for Chapter 7, or alternatively file for Chapter 13 bankruptcy.

Household size determines what income you have to fall below in order to pass this test. If you have two people cohabitating, you will need to report both individual’s income and both individual’s expenses in order to arrive at household income. Even if you, as a filing individual, make very little to no money, you may be disqualified if your cohabitating partner makes more. This is a complicated issue that may be different depending on where you live. Talk to your bankruptcy attorney about your options and the rules in your area.

Gay couples will basically be treated the same way as straight cohabitants for the purposes of the bankruptcy code. In addition, those who are married legally may face difficulties filing jointly, although the law is in transition on the subject.

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