Getting married in the middle of a New York bankruptcy probably isn’t anyone’s idea of romance, but perhaps there’s a certain sentimentalism to it. For chapter 7 cases, it’s pretty easy: The debtor’s situation as of the filing date matters most, so getting married after that is unlikely to change anything unless you were cohabitating beforehand.
For chapter 13 marriages, though, it’s a little different, but it’s largely similar to what happens when you’re expecting a child in bankruptcy. In that scenario, the debtor’s household expenditures increase, so the debtor could modify the plan to lower the monthly payments. With a new spouse, however, the additional household member usually adds income to the household, and because the plan is based on household and not individual income, it’s possible problems will arise.
But first, the non-filing spouse is not going to be required to sign over his or her paycheck to increase the plan payments. The bankruptcy forms allow debtors to deduct their spouses’ expenses, from their personal debts to their 401(k) accounts, to say nothing of their children, who sometimes come along. The repayment plan is meant to be paid out of the household’s disposable income, not all of it.
In the majority of circumstances the couple is already married, shares bank accounts and debts, except sometimes for auto loans or the stray credit card. In these cases, there’s an argument for filing jointly. Adding a new spouse can complicate the situation, but sometimes, the trustee won’t mind since the plan was already confirmed. Here are a few factors that may affect your case.
- Time remaining on the plan: If the chapter 13 case is rolling up, or if it’s not too much of a hassle for the spouse’s income to be included, then there’s less to worry about.
- Location of the new spouse: Relatedly, if the spouse doesn’t move in, then the plan won’t need to be modified. Sometimes couples live apart for money reasons.
- Employment of the new spouse: If the new spouse is a highly paid professional, then creditors or the trustee might feel more inclined to move the bankruptcy court to modify the plan. By contrast, if the new spouse is only making ends meet, then it’s not going to be as much of an issue.
- How the plan treats unsecured creditors: If the unsecured creditors weren’t seeing much from the repayment plan before the new marriage, then they’ll probably want more afterward if there’s enough in it for them.
Naturally, of course, the new spouse knows about the bankruptcy and is fine with it.
People are more likely to start chapter 13 married than end up married to someone new at the end of it, and both cases are so complicated that they require the handling of an experienced New York bankruptcy lawyer.
For answers to more questions about marriage in bankruptcy, the automatic stay, effective strategies for dealing with foreclosure, and protecting your assets in bankruptcy please feel free to contact experienced Chapter 13 Bankruptcy Lawyer Brooklyn NY Bruce Weiner for a free initial consultation.