How does a spouse's income affect the means test?

The means test determines who is eligible to file for Chapter 7 bankruptcy, among other things. The test is intended to weed out those who could afford to pay back at least some of their debts. If you fail the means test, you won't be allowed to use Chapter 7. Instead, you'll have to use Chapter 13 and enter into a three- to five-year repayment plan if you want to declare bankruptcy. 

The first part of the means test compares your average income over the six months before you file to the median income for a household of your size in your state. If your income is less than the median, you pass the means test and don't have to complete the rest of the form. If your income exceeds the median, you can still pass the test if your disposable income (what's left after subtracting certain allowed expenses) is less than a minimum amount set by law. However, if your disposable income is over the limit, you won't be able to use Chapter 7. 

If you are married, you must include your spouse's income when taking the means test, even if you are filing for bankruptcy alone. There are a couple of exceptions to this general rule, however. You can exclude some or all of your spouse's income, if you are filing for bankruptcy alone, in these situations:

• If you are legally separated and living apart, you don't have to count your spouse's income. 
• If part of your spouse's income doesn't go toward household expenses, you can subtract that amount on the means test. For example, if your wife is supporting a child from a previous relationship, you can subtract what she pays in child support. Or, if your spouse pays the mortgage on a home he inherited, you can subtract that amount.