In a Chapter 7, can a non-filing spouse’s disability payment be exempt from the means test?

My husband is looking to file; I will not be filing. He seems to pass the means test with both of our incomes, however I received a worker’s comp permanent partial disability payment 2 months ago in the amount of $6,000. The accident that occurred happened a year prior to our marriage. The impairment rating was given prior to our marriage but the lump sum award was received 3 months into our marriage and it was received in the 6 month look-back for the means test. From what I understand this should be reported as income for the means test. This will add an additional $1000 per month to income and will cause presumption of abuse. Since this was my award that started prior to our marriage, can it be exempted?

Asked on October 19, 2014 under Bankruptcy Law, Tennessee

Answers:

MD, Member, California Bar / FreeAdvice Contributing Attorney

Answered 6 years ago | Contributor

It may be argued that your disability payment was awarded to you prior to marriage.  Keep in mind, that your need to check if the CMI and DMI are two different calculations and the best way to ensure the funds are not included or calculated is to disclose but not include.  Indicate the non-filing spouse has disability income accrued prior to marriage and it was not part of your income until just prior to bankruptcy.  That should help.

MD, Member, California Bar / FreeAdvice Contributing Attorney

Answered 6 years ago | Contributor

It may be argued that your disability payment was awarded to you prior to marriage.  Keep in mind, that your need to check if the CMI and DMI are two different calculations and the best way to ensure the funds are not included or calculated is to disclose but not include.  Indicate the non-filing spouse has disability income accrued prior to marriage and it was not part of your income until just prior to bankruptcy.  That should help.


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