It is said that love and money don’t mix, and it might be true to some extent. Money might be the reason for a fair number of marriages and similarly divorces. Lawyers of Dallas based bankruptcy law firm Recovery Law Group bear testimony to the fact that many people filing for bankruptcy might end up with a divorce or are filing for bankruptcy because of it. It is therefore important to be clear about these matters before going ahead with the marriage.
The BAPCPA (Bankruptcy Abuse Prevention and Consumer Protection Act), passed in 2005 imposed a restriction on bankruptcy filers who wished to qualify for Chapter 7 bankruptcy. According to 11 USC 707(b) or the Means test, the average income of the household must be less than the state median for a household of the same size. The median income charts are updated annually and available through the IRS. If the average household income is more than the state median you cannot file for Chapter 7 bankruptcy and need to file for Chapter 13 bankruptcy. The gross income is calculated as defined by IRS under 26 USC 61.
Unfortunately for debtors, when it comes to the household income, it is not just the debtor’s earnings that are considered but the incomes of every household member including parents, spouse or friends. Though marriage may increase the household size, it is not necessary that a change in gross income also takes place. If your spouse earns handsomely, you will not be able to file for Chapter 7 as the average household income will be more than the state median in this case. However, you will be able to handle Chapter 13 bankruptcy in this case. If the spouse doesn’t have any income, you might be able to qualify for Chapter 7 bankruptcy.
Though bankruptcy concepts have transformed over the years from its biblical references, they are still complicated for the common man to understand. If you need a consultation with experienced bankruptcy lawyers, you can call 888-297-6023.