In addition to being emotionally draining for most people, divorces can cause a myriad of issues with the most substantial problems being financial issues. Sometimes couples split, but don’t legally divorce. Some states recognize legal separation, but Florida does not. Living separately from your spouse while still being married is fine, but in Florida it does not have any special legal recognition. When an individual who is simply living separate from his or her spouse (or is going through a divorce) considers bankruptcy, they often want to know if they can proceed with a bankruptcy without involving their spouse.
The current bankruptcy laws allow a debtor to file an individual bankruptcy regardless of whether he or she is married or in the process of getting a divorce. A debtor is allowed to file a joint or individual bankruptcy during a marriage or during an ongoing divorce. Generally, when a person is married and filing bankruptcy, either individually or jointly, the income of both spouses determines what type of bankruptcy a debtor can file; either a Chapter 7, 13 or 11. This is known as household income in bankruptcy. Even if only one spouse is filing bankruptcy, the income of the other non-filing spouse will be taken into consideration and must be disclosed to the trustee and court.
Having the income of both parties included can create a huge problem when a married couple is separating and living apart and one spouse wants to file bankruptcy. They may be able to qualify for a Chapter 7 alone, but not when their non-filing spouse’s income is taken into consideration. When married couples are living separately, this means there are two houses and two sets of expenses.
Luckily, Florida has something called the “marital adjustment” in bankruptcy. The marital adjustment allows a spouse who is filing individually to subtract from their non-filing spouses income expenses that solely belong to the non-filing spouse. For example, if the non-filing spouse has a monthly car payment for a vehicle owned exclusively by the non-filing spouse, these type of expenses may be subtracted from the couples total income. This allows the filing spouse to not be penalized for expenses that are not for his or her benefit.
Call the Law Office of David Goldman PLLC today at 904-685-1200 for more information. Our experience divorce lawyers and bankruptcy lawyers can help.
by Kendal Sander, Esq.